N.J. Stat. tit. 17B, ch. 26A

in effect

N.J. Stat. § 17B:26A-1 Definitions

1. For the purposes of this act: a. "Applicant" means: (1) In the case of an individual medicare supplement policy, the person who seeks to contract for insurance benefits, and (2) In the case of a group medicare supplement policy, the proposed certificate holder. b. "Certificate" means any certificate issued under a group medicare supplement policy, which certificate has been delivered or issued for delivery in this State. c. "Commissioner" means the Commissioner of Insurance. d. "Medicare" means the program established by the "Health Insurance for the Aged Act," Title XVIII of the "Social Security Act," Pub.L. 89-97, as then constituted or later amended (42 U.S.C. s.1395 et seq.). e. "Medicare supplement policy" means a group or individual insurance policy or certificate which is advertised, marketed, designed primarily as, or is otherwise held out to be, a supplement to reimbursements under medicare for the hospital, medical or surgical expenses of persons eligible for medicare, other than a policy issued pursuant to a contract under 42 U.S.C. s.1395l or 42 U.S.C. s.1395mm or a policy issued under a demonstration project authorized pursuant to the "Health Insurance for the Aged Act," 42 U.S.C. s.1395 et seq. The term does not include a policy issued to one or more employers or labor organizations, or to the trustees of a fund established by one or more employers or labor organizations, or combination thereof, for employees or former employees, or combination thereof, or for members or former members, or combination thereof, of the labor organizations. L.1982,c.94,s.1; amended 1992,c.163,s.2.

N.J. Stat. § 17B:26A-2 Regulations; medicare supplement policies

The commissioner shall issue regulations to establish specific standards for policy provisions of medicare supplement policies, which shall be in addition to and in accordance with applicable laws of this State, and may cover, but shall not be limited to: a. Terms of renewability; b. Initial and subsequent conditions of eligibility; c. Nonduplication of coverage; d. Probationary periods; e. Benefit limitations, exceptions and reductions; f. Elimination periods; g. Requirements for replacement; h. Recurrent conditions; and i. Definition of terms. L.1982, c. 94, s. 2.

N.J. Stat. § 17B:26A-3 Prohibited provisions

3. a. No medicare supplement policy shall contain benefits which duplicate any benefits provided by medicare. b. The commissioner may issue regulations that specify prohibited policy provisions not otherwise specifically authorized by statute which, in the opinion of the commissioner, are unjust, unfair or unfairly discriminatory to any person insured or proposed for coverage under a medicare supplement policy. L.1982,c.94,s.3; amended 1992,c.163,s.3.

N.J. Stat. § 17B:26A-4 Preexisting condition; denial of claim for losses

Notwithstanding any other provision of law of this State to the contrary, a medicare supplement policy may not deny a claim for losses incurred more than 6 months from the effective date of coverage for a preexisting condition. The policy may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within 6 months before the effective date of coverage. L.1982, c. 94, s. 4.

N.J. Stat. § 17B:26A-5 Regulations

5. The commissioner shall promulgate regulations to effectuate and enforce the provisions of P.L.1982, c.94 (C. 17B:26A-1 et seq.) and any regulations which are necessary to conform medicare supplement policies and certificates with federal law. These regulations shall include, but not be limited to: a. Establishment of minimum standards for benefits, claim payments, marketing and reporting practices and compensation arrangements; b. Establishment of a uniform methodology for calculating and reporting loss ratios, and requiring refunds or credits if the policies or certificates do not meet loss ratio requirements; c. Establishment of a process for filing of all requests for premium increases and rate changes, which may include public hearings as determined appropriate by the commissioner prior to approval of any premium increases; d. Assurance of access by the public to policy, premium and loss ratio information; and e. Establishment of standards for Medicare Select policies and certificates at such time as this State is authorized under federal law to authorize Medicare Select policies and certificates. L.1982,c.94,s.5; amended 1992,c.163,s.4.

N.J. Stat. § 17B:26A-6 Medicare supplement policy or certificate, requirements

6. a. No insurer shall deliver or issue for delivery to a resident of this State a medicare supplement policy or certificate, or any application, rider or endorsement to be used in connection with the issuance or renewal of any such policy or certificate, unless the form has been submitted to and filed by the commissioner pursuant to the provisions of this subsection. (1) At the expiration of 30 days after submission, such form shall be deemed filed unless prior thereto it has been affirmatively filed or disapproved for filing by the commissioner. (2) No master policy, certificate or policy, which is disapproved for filing by the commissioner during the 30-day period, may be delivered or issued for delivery in this State unless and until the disapproval for filing is withdrawn. Any disapproval shall be subject to review in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). Any form which is filed by the commissioner or deemed filed may be delivered or issued for delivery in this State until such time as any subsequent withdrawal of the filing by the commissioner, following an opportunity for a hearing held in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). (3) The commissioner may extend the 30-day period provided in paragraph (1) of this subsection for not more than 30 additional days by giving written notice of extension before the expiration of the initial 30-day period. In the event of extension, all of the provisions of this subsection, except this provision for extension, relating to the initial 30-day period shall apply to the extended period instead of the initial 30-day period. (4) The disapproval for filing or the withdrawal of the filing of any form by the commissioner shall state in writing the grounds therefor in such detail as is reasonable to inform the insurer of the reasons for withdrawal or disapproval. (5) The provisions of this subsection shall not apply to documents which relate only to the manner of distribution of benefits or to the reservation of rights and benefits under the certificate or policy which are used at the request of the individual insured or the policyholder. (6) The disapproval by the commissioner of any form submitted for filing pursuant to the provisions of this subsection may be on the ground that the form contains provisions which are unjust, unfair, inequitable, misleading, or contrary to law or to the public policy of this State. b. Any insurer providing medicare supplement insurance in this State shall file annually with the commissioner its rates, rating schedule and supporting documentation demonstrating that it is in compliance with the applicable loss ratio standards of this State. All filings of rates and rating schedules shall demonstrate that the actual and expected losses in relation to premiums comply with the requirements of P.L.1982, c.94 (C.17B:26A-1 et seq.) and any rule or regulation promulgated thereunder. c. Medicare supplement policies shall be expected to return to policyholders benefits which are reasonable in relation to the premium charged. The commissioner shall issue regulations to establish minimum standards for loss ratios of medicare supplement policies on the basis of paid claim experience and written premiums in accordance with accepted actuarial principles and practices. L.1982,c.94,s.6; amended 1992,c.163,s.5.

N.J. Stat. § 17B:26A-7 Outline of coverage, regulations

7. a. In order to provide for full and fair disclosure in the sale of medicare supplement policies, no medicare supplement policy or certificate shall be delivered or issued for delivery in this State unless an outline of coverage is delivered to the applicant at the time application is made. b. The commissioner shall prescribe the format and content of the outline of coverage required by subsection a. of this section. For the purposes of this section, "format" means style, arrangement and overall appearance, including such items as the size, color and prominence of the font used, paper size and weight and the arrangement of text and captions. The outline of coverage shall include: (1) A description of the principal benefits and coverage provided in the policy; (2) (Deleted by amendment, P.L.1992, c.163). (3) A statement of the renewal provisions, including any reservation by the insurer of a right to change premiums, and disclosure of the existence of any automatic renewal premium increases based on the policyholder's age; and (4) A statement that the outline of coverage is a summary of the policy issued or applied for and that the policy should be consulted to determine governing contractual provisions. c. The commissioner may require by regulation the publication of forms and an informational brochure with a standardized format and content, to serve as an aid in the selection of appropriate coverage, if any, by those eligible for medicare, and to aid the consumer in improving his understanding of medicare benefits. Except in the case of direct response solicitation insurance policies, the commissioner may require by regulation that the informational brochure be provided, concurrently with delivery of the outline of coverage, to all prospective insureds eligible for medicare. With respect to direct response solicitation insurance policies, the commissioner may require by regulation that the prescribed brochure be provided upon request to any prospective insureds eligible for medicare, but in no event later than the time of policy delivery. d. The commissioner may promulgate regulations for captions or notice requirements for all accident and sickness insurance policies sold to persons eligible for medicare, other than for medicare supplement policies, to inform those prospective insureds that the particular insurance coverage is not a medicare supplement policy. e. The commissioner may further promulgate regulations to govern the full and fair disclosure of the information in connection with the replacement of insurance policies or certificates by persons eligible for medicare. L.1982,c.94,s.7; amended 1992,c.163,s.6.

N.J. Stat. § 17B:26A-8 30-day examination period, refunds

8. Medicare supplement policies or certificates shall have a notice prominently printed on the first page of the policy or certificate or attached thereto stating in substance that the applicant shall have the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the applicant is not satisfied for any reason. Refunds made pursuant to this section shall be made in a timely manner and shall be paid directly to the applicant. L.1982,c.94,s.8; amended 1992,c.163,s.7.

N.J. Stat. § 17B:26A-9 Applicability

1. Except as otherwise specifically provided: a. The provisions of P.L.1982, c.94 (C.17B:26A-1 et seq.) shall apply to all medicare supplement policies delivered or issued for delivery in this State and all certificates issued under group medicare supplement policies, which certificates are delivered or issued for delivery in this State. b. The provisions of P.L.1982, c.94 (C.17B:26A-1 et seq.) shall not apply to health insurance policies, including group conversion policies, provided to medicare eligible persons that are not advertised, marketed, designed primarily as or otherwise held out to be medicare supplement policies. L.1992,c.163,s.1.

N.J. Stat. § 17B:26A-10 Filing of copies of advertising materials, regulations

8. a. Every insurer shall file with the Department of Insurance a copy of all advertising materials to be used in promoting medicare supplement policies to which residents of this State will have access, and through which the insurer intends, or by implication purports to the reasonable, targeted consumer its intent, to make such policies available for purchase or enrollment in this State. The requirements of this section shall apply to all advertisements in any medium, whether in print or by means of television or radio broadcast. Filings shall be made at least 30 days prior to the date on which the advertisement is to be used in this State, or made accessible to residents of this State. b. The commissioner may, in the public interest, promulgate regulations governing medicare supplement policy advertising including, but not limited to, specific filing procedures, standards upon which review may be based, celebrity endorsements, unfair practices and review and disapproval procedures. c. Notwithstanding the provisions of subsection b. of this section, the commissioner may disapprove any advertisement for use in this State at any time if he determines that the advertisement misrepresents the product, misleads the targeted consumer, uses a strategy which involves scare tactics, unnecessarily confusing data or representation, false or fraudulent statements or otherwise violates any applicable laws of this State or regulations promulgated thereunder. L.1992,c.163,s.8.

N.J. Stat. § 17B:26A-11 Additional remedies

9. In addition to any other applicable penalties for violation of the provisions of Title 17B of the New Jersey Statutes, the commissioner may require any health insurer violating the provisions of P.L.1982, c.94 (C.17B:26A-1 et seq.) to cease marketing any medicare supplement policy or certificate in this State which is related directly or indirectly to the violation, require that insurer to take such action as is necessary to comply with the provisions of that act, or both. L.1992,c.163,s.9.

N.J. Stat. § 17B:26A-12 Findings, declarations relative to Medicare supplement insurance.

1. The Legislature finds and declares that: a. As of April 1, 1995, individuals in the State of New Jersey under age 65 who became eligible for Medicare benefits due to a disability or because they suffer from the end stage of renal disease do not have access to Medicare supplement insurance, otherwise known as "Medigap" insurance. b. Prior to that date only one health insurance carrier in New Jersey offered Medicare supplement insurance contracts to the under 65 population. Unsustainable losses, caused in part by the fact that this carrier was the only carrier providing such coverage, led to the carrier's withdrawal from the Medicare supplement insurance market for the under 65 population on March 31, 1995. c. Because Medicare supplement insurance pays for many of the health care expenses not covered by Medicare, the absence of Medicare supplement insurance will eventually leave thousands of blind, AIDS, disabled and dialysis patients in New Jersey without any means of secondary insurance to supplement their Medicare coverage. For many of these people with serious illnesses, the 20 percent co-payments and deductibles charged by Medicare will cause financial hardship and emotional distress. If no action is taken, Medicare recipients under 65 years old will be forced to deplete their personal assets and may eventually be forced to resort to Medicaid to supplement their health care needs. d. Subsequent to the enactment of P.L.1995, c. 229 (C.17B:26A-12 et seq.), section 401 of the Medicare Access and CHIP Reauthorization Act of 2015, Pub. L. 114-10, amended section 1882 of the Social Security Act (42 U.S.C. s.1395ss), prohibiting the issue of Medicare supplement policies that provide coverage of the Medicare Part B deductible to an individual who, on or after January 1, 2020, is a newly eligible Medicare beneficiary, and further specifying that, with respect to newly eligible Medicare beneficiaries, reference to a Medicare supplement policy which has a benefit package classified as Medicare Supplement Plan C shall be deemed, as of January 1, 2020, to be a reference to a Medicare supplement policy which has a benefit package classified as Medicare Supplement Plan D, unless the Secretary of the United States Department of Health and Human Services provides otherwise. e. Therefore, the Legislature declares that it is in the public interest: (1) to ensure that Medicare supplement insurance is available to the individuals under 65 years of age who become eligible for Medicare benefits; (2) to require all health insurance carriers who currently sell Medicare supplement insurance to the age 65 and over population to also offer, at a minimum, Medicare Supplement Plan C coverage to the under age 65 population who become eligible for Medicare prior to January 1, 2020; (3) to require all health insurance carriers that currently sell Medicare supplement insurance to the age 65 and over population to also offer, at a minimum, Medicare Supplement Plan D coverage to the under age 65 population who become newly eligible on or after January 1, 2020; (4) to establish a mechanism that will: allow the premiums on those Medicare supplement insurance policies and contracts to remain affordable; encourage insurance carriers to continue to serve or enter this market; and provide for the equitable sharing of any losses; (5) to ensure that premiums for the more than 200,000 New Jersey residents who have purchased Medicare supplement insurance remain affordable and do not become subject to excessive rate increases; and (6) that regulations necessary to effectuate the purposes of this act be promulgated by the Commissioner of Banking and Insurance expeditiously due to the urgency of the situation. L.1995, c.229, s.1; amended 2019, c.139, s.1.

N.J. Stat. § 17B:26A-13 Medicare supplement plans offered.

2. a. Except as otherwise provided in subsection d. of this section, every carrier issuing or renewing Medicare supplement insurance policies or contracts shall, as a condition of issuing or renewing health benefits plans in this State: (1) offer and renew, at a minimum, Medicare Supplement Plan C policies or contracts to persons in this State 50 years of age or older who are entitled to Medicare benefits due to disability prior to January 1, 2020; (2) offer and renew, at a minimum, Medicare Supplement Plan D policies or contracts to persons in this State 50 years of age or older who are newly eligible Medicare beneficiaries on or after January 1, 2020; and (3) offer and renew Medicare Supplement Plan D policies or contracts to persons in this State 50 years of age or older who are entitled to Medicare benefits due to disability prior to January 1, 2020 if such a person applies for Medicare Supplement Plan D on or after January 1, 2020 but during the six-month period beginning with the first of the month in which the individual is enrolled in Medicare Part B, and the individual is not covered by any other Medicare Supplement Plan. b. No carrier shall deny or condition the issuance or renewal of a Medicare supplement insurance policy or contract available for sale in this State pursuant to subsection a. of this section nor discriminate in the pricing of such policy or contract because of the health status, claims experience, receipt of health care or medical condition of an applicant if an application for Medicare Supplement Plan C is submitted during the six-month period beginning with the first month in which an individual is enrolled for benefits under Medicare Part B or if the application for Medicare Supplement Plan D is submitted within 12 months beginning with the first month in which an individual is enrolled for benefits under Medicare Part B if the individual is a newly eligible Medicare beneficiary on or after January 1, 2020. c. Subsections a. and b. of this section shall not be construed as preventing the exclusion of benefits under a policy or contract during the first three months, based on a preexisting condition for which the insured received treatment or was otherwise diagnosed during the six months before the policy or contract became effective, except that the limitation shall not apply to an individual who has, under a prior health benefits policy or contract, with no intervening lapse in coverage, been treated or diagnosed by a physician for a condition under that policy or contract or satisfied a three-month preexisting condition limitation. d. (1) Notwithstanding the provisions of subsection a. of this section to the contrary, a carrier that does not currently issue or renew individual Medicare supplement insurance policies or contracts and does issue and renew Medicare supplement insurance policies or contracts for groups whose membership in the group is not based on health status, claims experience, receipt of health care or medical condition, shall not be required to provide coverage to persons eligible for Medicare supplement insurance coverage pursuant to subsection a. of this section, other than to members of the group. (2) No group to which the provisions of paragraph (1) of this subsection apply shall institute an age requirement for participation in the group after June 1, 1995. e. (1) Rates for Medicare supplement insurance policies or contracts issued pursuant to this section shall be no greater than the lowest rate charged by a carrier for the same type of policies or contracts issued to persons 65 years of age and over and shall be formulated in accordance with the provisions of section 6 of P.L.1982, c.95 (C.17:35C-6) or section 6 of P.L.1982, c.94 (C.17B:26A-6), as appropriate, and any rules or regulations promulgated pursuant thereto. (2) Following the close of each carrier's accounting year, if the commissioner determines that a carrier's loss ratio for policies or contracts issued pursuant to section 2 or 3 of P.L.1995, c.229 (C.17B:26A-13 or 17B:26A-14) was less than 75% for group policies or contracts or less than 65% for individual policies or contracts for that calendar year, the carrier shall be required to refund to the holders of any policy or contract the difference between the amount of net earned premium it received that year and the amount that would have been necessary to achieve the 75% or 65% loss ratio, as appropriate. L.1995, c.229, s.2; amended 2019, c.139, s.2.

N.J. Stat. § 17B:26A-14 Rules, regulations; rates; plan provisions.

3. a. The commissioner shall adopt rules and regulations establishing a plan to provide Medicare Supplement Plan C coverage of the standardized Medicare supplement plans to persons under 50 years of age in this State who are entitled to Medicare benefits due to disability prior to January 1, 2020, and further, establishing a plan to provide Medicare Supplement Plan D coverage to persons in this State under 50 years of age who are entitled, on a newly eligible basis, to Medicare benefits due to disability on or after January 1, 2020. b. The plan shall not deny or condition the issuance or renewal of a Medicare supplement insurance policy or contract available for sale in this State pursuant to subsection a. of this section nor discriminate in the pricing of such policy or contract because of the health status, claims experience, receipt of health care or medical condition of an applicant if an application for a Medicare Supplement Plan C policy or contract is submitted during the six-month period beginning with the first month in which an individual is enrolled for benefits under Medicare Part B or if the application for a Medicare Supplement Plan D policy or contract is submitted during the 12-month period beginning with the first month in which an individual is enrolled for benefits under Medicare Part B, and a newly eligible Medicare beneficiary on or after January 1, 2020. The plan shall provide that an individual who becomes eligible for Medicare due to disability prior to January 1, 2020 has an opportunity to apply for Medicare Supplement Plan D if the individual applies on or after January 1, 2020, but during the six-month period beginning with the first of the month in which the individual is enrolled for benefits under Medicare Part B, and the individual is not covered by any other Medicare Supplement Plan. c. Subsections a. and b. of this section shall not be construed as preventing the exclusion of benefits under a policy or contract during the first three months, based on a preexisting condition for which the insured received treatment or was otherwise diagnosed during the six months before the policy or contract became effective. d. The plan shall provide for the appointment of a contracting carrier to provide the coverage specified in subsection a. of this section. The carrier shall have experience in providing and servicing standardized Medicare supplement insurance policies or contracts to persons in this State. e. The rates for the plan established pursuant to subsection a. of this section shall be no greater than the lowest rate charged by the contracting carrier for Medicare Supplement Plan C or Medicare Supplement Plan D policies or contracts, as applicable, issued by the contracting carrier to persons pursuant to subsection a. of section 2 of P.L.1995, c.229 (C.17B:26A-13). f. The plan shall provide for the appointment of a governing board which shall be responsible for implementing the provisions of P.L.1995, c.229 (C.17B:26A-12 et seq.) consistent with the rules and regulations adopted pursuant to subsection a. of this section. The governing board shall include representatives from, among others, the carriers and health maintenance organizations subject to the provisions of section 4 of P.L.1995, c.229 (C.17B:26A-15). L.1995, c.229, s.3; amended 2019, c.139, s.3.

N.J. Stat. § 17B:26A-15 Procedures for equitable sharing of losses; conditions; filing statement

4. The plan shall establish procedures for the equitable sharing of any losses incurred by the contracting carrier providing coverage under the plan pursuant to subsection a. of section 3 of this act as follows: a. By March 1, 1996 and following the close of each calendar year thereafter, on a date established by the commissioner: (1) (a) every carrier and health maintenance organization issuing health benefits plans or health maintenance organization subscriber contracts in this State shall file with the commissioner its net earned premium in the preceding calendar year ending December 31; and (b) the contracting carrier issuing Medicare supplement insurance policies or contracts under the plan established pursuant to subsection a. of section 3 of this act shall file with the commissioner its net earned premium on those policies or contracts and the claims paid and the administrative expenses attributable to those policies or contracts in the preceding calendar year ending December 31; and (2) No later than March 1, 1996 and following the close of each calendar year thereafter, on a date established by the commissioner, a contracting carrier issuing Medicare supplement insurance policies or contracts pursuant to subsection a. of section 3 of this act shall file with the commissioner a statement of any net loss on those policies or contracts in the calendar year ending December 31, along with any supporting information required by the commissioner. For purposes of this subsection, a loss shall occur if the claims paid and reasonable administrative expenses for Medicare supplement insurance policies or contracts issued to individuals under 50 years of age pursuant to subsection a. of section 3 of this act exceed the net earned premium and any investment income thereon. b. (1) Every carrier and health maintenance organization authorized to provide health benefits plans or health maintenance organization subscriber contracts in this State shall be liable for an assessment to reimburse the contracting carrier issuing Medicare supplement insurance contracts or policies pursuant to subsection a. of section 3 of this act for any net loss incurred by the contracting carrier in the previous year, unless the carrier or health maintenance organization has received an exemption from the commissioner pursuant to paragraph (3) of this subsection. (2) The assessment of each carrier and health maintenance organization shall be in the proportion that the net earned premium of the carrier or health maintenance organization for all health benefits plans or health maintenance organization subscriber contracts issued or renewed in the calendar year preceding the assessment bears to the net earned premium of all carriers and health maintenance organizations for all health benefits plans or health maintenance organization subscriber contracts issued or renewed in the calendar year preceding the assessment and shall be carried out in a form and manner to be determined by the commissioner. (3) A carrier or health maintenance organization that is financially impaired may seek from the commissioner an exemption or a deferment in whole or in part from any assessment issued by the commissioner. The commissioner may exempt a carrier or health maintenance organization from an assessment or defer, in whole or in part, the assessment of a carrier or health maintenance organization if, in the opinion of the commissioner, the payment of the assessment would endanger the ability of the carrier or health maintenance organization to fulfill its contractual obligations. If an assessment against a carrier or health maintenance organization is deferred in whole or in part or if the carrier or health maintenance organization is exempt from the assessment, the amount by which the assessment is deferred or the amount that a carrier or health maintenance organization is exempted from paying may be assessed against the other carriers and health maintenance organizations in a manner consistent with the basis for assessment set forth in this section. c. Payment of an assessment made under this section shall be a condition of issuing health benefits plans and health maintenance organization subscriber contracts in the State for a carrier or health maintenance organization. Failure to pay the assessment shall be grounds for forfeiture of a carrier's or health maintenance organization's authorization to issue health benefits plans and health maintenance organization subscriber contracts in the State, as well as any other penalties permitted by law. d. Notwithstanding the provisions of this section to the contrary, no carrier or health maintenance organization shall be liable for an assessment to reimburse the contracting carrier pursuant to this section in an amount which exceeds 35% of the net loss of the contracting carrier. To the extent that this limitation results in any unreimbursed loss to the contracting carrier, the unreimbursed loss shall be distributed among all carriers and health maintenance organizations: (1) which owe assessments pursuant to subsection a. of this section; (2) whose assessments do not exceed 35% of the net loss of the contracting carrier; and (3) who have not received an exemption pursuant to paragraph (3) of subsection b. of this section. L.1995,c.229,s.4.

N.J. Stat. § 17B:26A-16 Audit required, conditions

5. a. Whenever the contracting carrier reports a net loss to the commissioner pursuant to paragraph (2) of subsection a. of section 4 of this act, the related operations of the contracting carrier and any losses incurred by the contracting carrier regarding Medicare supplement insurance policies or contracts issued pursuant to subsection a. of section 3 of this act shall be subject to an audit conducted by a qualified independent certified public accountant prior to the imposition of any assessment pursuant to subsection b. of section 4 of this act. b. The auditor shall be selected and approved by the governing board of the plan through a competitive bidding process of certified public accountants qualified in New Jersey to perform such audits. The audit shall include: (1) a review of the handling and accounting of assets and monies of the contracting carrier; (2) a determination that administrative expenses have been properly allocated and are reasonable; (3) a review of the internal financial controls of the contracting carrier; (4) a review of the annual financial report of the contracting carrier; and (5) a review of the calculation by the commissioner of any assessments for net losses. c. A copy of the audit and related management letters shall be delivered to the governing board of the plan, to the commissioner and to each carrier and health maintenance organization to which the provisions of this act apply. The audit report shall be reviewed by the governing board of the plan. Upon recommendation of the governing board, the contracting carrier shall implement any recommendations made by the auditor. L.1995,c.229,s.5.

N.J. Stat. § 17B:26A-17 Definitions.

6. As used in this act: "Carrier" means an insurance company or service corporation authorized to issue health benefits plans in this State. "Financially impaired" means a carrier or health maintenance organization which, after the effective date of P.L.1995, c.229 (C.17B:26A-12 et seq.), is not insolvent, but is deemed by the commissioner to be potentially unable to fulfill its contractual obligations, or a carrier or health maintenance organization which is under an order of rehabilitation or conservation by a court of competent jurisdiction. "Health benefits plan" means a hospital and medical expense insurance policy; hospital service corporation contract, medical service corporation contract or health service corporation contract delivered or issued for delivery in this State. "Newly eligible" means first eligible for Medicare benefits by reason of age or disability on or after January 1, 2020, in accordance with 42 U.S.C. s.426 or 426-1. L.1995, c.229, s.6; amended 2019, c.139, s.4.

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