California Code of Regulations › Title 28 - Managed Health Care › Division 1 - The Department of Managed Health Care › Chapter 2 - Health Care Service Plans › Article 1 - Exemptions › Section 1300.43.13 - Mutual Benefit Plans

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
A health care service plan which is a bona fide mutual
					 benefit society within the meaning of this section and which was registered
					 under the Knox-Mills Health Plan Act as in effect on June 30, 1976 is exempted
					 from the provisions of the Knox-Keene Health Care Service Plan Act, except as
					 otherwise indicated below, subject to each of the following conditions:
(a) That such a plan is a corporation
				  organized and operating as a California nonprofit corporation; does not engage,
				  directly or indirectly, in any for-profit business; is not affiliated (Rule
				  1300.45(c)) with any other plan or with any corporation or other entity which
				  engages, directly or indirectly, in any for-profit business; and does not
				  contract or otherwise arrange for the performance of any portion of its
				  administrative functions by persons other than its officers, directors, or
				  employees.
(b) That such plan
				  consists of a mother lodge and not more than one subordinate lodge; provided,
				  however, that such mother lodge and any such subordinate lodge are located in a
				  county whose population exceeds 1,500,000 persons.
(c) That the assets and funds available for
				  the payment of health care services are held in trust by and under the sole
				  control of the mother lodge exclusively for the benefit of the beneficiary
				  members of the mother lodge and any subordinate lodge.
(d) That such plan is exempted from federal
				  income tax as an organization described in Section
				  501(c)(8) of the
				  Internal Revenue Code and from state income tax on similar grounds.
(e) That such plan is in compliance with the
				  Uniform Supervision of Trustees for Charitable Purposes Act (Article 7
				  (commencing with Section
				  12580) of Chapter 6 of Part 2 of
				  Division 3 of Title 2 of the Government Code.)
(f) That such plan not practice any
				  discrimination in violation of state or federal law or constitutional
				  provision.
(g) That the beneficial
				  membership in such plan is limited to beneficial members of the mutual benefit
				  society (including only the mother lodge and any subordinate lodge) and
				  consists of a total of not more than 800 persons.
(h) That such plan not receive any prepaid or
				  periodic charges, except that admission fees of not more than $500 per each
				  beneficial or social member may be received and dues of not more than $100 per
				  each beneficial or social member per year may be received, provided, however,
				  that no part of any admission fees or membership dues may be deposited in the
				  health care trust or used to pay for or reimburse any part of the cost of
				  health care services.
(i) That such
				  plan, at all times while it relies upon this exemption, has a tangible net
				  equity within the meaning of Section
				  1300.76(b) of not
				  less than $500,000, including liquid tangible assets in an amount not less than
				  $500,000, based upon its most recent annual certified financial statement and
				  its most recent quarterly and monthly statements prepared on a basis consistent
				  with the annual certified statement, with additional liquid tangible assets in
				  an amount not less than $1,000 for each beneficial member in excess of 700;
				  provided that the maximum number of beneficial members shall not exceed
				  800.
(j) That such plan, upon
				  request of the Director, pursuant to Section
				  1384(a) of the
				  Act, submits to the Director a copy of its most recent annual certified
				  financial statement, and, upon request of the Director pursuant to Section
				  1384(f) of the
				  Act, submits to the Director its most recent quarterly and monthly statements
				  prepared on a basis consistent with the annual certified statement.
(k) That such plan issues to all beneficial
				  members health care service plan contracts which provide at least all of the
				  benefits indicated below, except that such contracts may diminish or qualify
				  any of the benefits indicated below through the use of such copayments,
				  limitations, and other terms as may be determined from time to time by vote of
				  the plan's beneficial members:
(1) Physician
				  services (including consultation and referral) through contracting
				  physicians;
(2) Hospital inpatient
				  services through at least one contracting nonprofit, nongovernmental
				  hospital;
(3) Hospital outpatient
				  services through at least one contracting nonprofit, nongovernmental hospital
				  when prescribed by the treating, contracting physician.