1993 LAWS OF MARYLAND

(D) (1) PRIOR TO MARCH I OF EACH YEAR, THE BOARD SHALL DETERMINE AND
REPORT TO THE COMMISSIONER THE POOL NET LOSS FOR THE PREVIOUS CALENDAR
YEAR, INCLUDING ADMINISTRATIVE EXPENSES AND INCURRED LOSSES FOR THE YEAR,
TAKING INTO ACCOUNT INVESTMENT INCOME AND OTHER APPROPRIATE GAINS AND
LOSSES.

(2) ANY NET LOSS FOR THE YEAR SHALL BE RECOUPED BY ASSESSMENTS
OF REINSURING CARRIERS.

(I) THE BOARD SHALL ESTABLISH, AS PART OF THE PLAN OF
OPERATION, A FORMULA BY WHICH TO MAKE ASSESSMENTS AGAINST REINSURING
CARRIERS. THE ASSESSMENT FORMULA SHALL BE BASED ON:

1. EACH REINSURING CARRIER'S SHARE OF THE TOTAL
PREMIUMS EARNED IN THE PRECEDING CALENDAR YEAR FROM HEALTH BENEFIT PLANS
DELIVERED OR ISSUED FOR DELIVERY TO SMALL EMPLOYERS IN THIS STATE BY
REINSURING CARRIERS; AND

2. EACH REINSURING CARRIER'S SHARE OF THE PREMIUMS
EARNED IN THE PRECEDING CALENDAR YEAR FROM NEWLY ISSUED HEALTH BENEFIT
PLANS DELIVERED OR ISSUED FOR DELIVERY DURING SUCH CALENDAR YEAR TO SMALL
EMPLOYERS IN THIS STATE BY REINSURING CARRIERS.

(II)      THE FORMULA ESTABLISHED UNDER SUBPARAGRAPH (I) OF THIS
PARAGRAPH MAY NOT RESULT IN ANY REINSURING CARRIER HAVING AN ASSESSMENT
SHARE THAT IS LESS THAN 50% NOR MORE THAN 150% OF AN AMOUNT WHICH IS BASED
ON THE PROPORTION OF THE REINSURING CARRIER'S TOTAL PREMIUMS EARNED IN THE
PRECEDING CALENDAR YEAR FROM HEALTH BENEFIT PLANS DELIVERED OR ISSUED
FOR DELIVERY TO SMALL EMPLOYERS IN THIS STATE TO TOTAL PREMIUMS EARNED IN
THE PRECEDING CALENDAR YEAR FROM HEALTH BENEFIT PLANS DELIVERED OR
ISSUED FOR DELIVERY TO SMALL EMPLOYERS IN THIS STATE BY ALL REINSURING
CARRIERS.

(III)    THE BOARD MAY, WITH THE APPROVAL OF THE COMMISSIONER,
CHANGE THE ASSESSMENT FORMULA ESTABLISHED PURSUANT TO SUBPARAGRAPH (I)
OF THIS PARAGRAPH. FROM TIME TO TIME AS APPROPRIATE. THE BOARD MAY PROVIDE
FOR THE SHARES OF THE ASSESSMENT BASE ATTRIBUTABLE TO PREMIUMS FROM ALL
HEALTH BENEFIT PLANS AND TO PREMIUMS FROM NEWLY ISSUED HEALTH BENEFIT
PLANS TO VARY DURING A TRANSITION PERIOD.

(IV)    SUBJECT TO THE APPROVAL OF THE COMMISSIONER, THE BOARD
SHALL MAKE AN ADJUSTMENT TO THE ASSESSMENT FORMULA FOR REINSURING
CARRIERS THAT ARE APPROVED HEALTH MAINTENANCE ORGANIZATIONS WHICH ARE
FEDERALLY QUALIFIED UNDER 42 U.S.C. SEC. 300, ET SEQ., TO THE EXTENT, IF ANY, THAT
RESTRICTIONS ARE PLACED ON THEM THAT ARE NOT IMPOSED ON OTHER SMALL
EMPLOYER CARRIERS.

(V)      PREMIUMS AND BENEFITS PAID BY A REINSURING CARRIER THAT
ARE LESS THAN AN AMOUNT DETERMINED BY THE BOARD TO JUSTIFY THE COST OF
COLLECTION SHALL NOT BE CONSIDERED FOR PURPOSES OF DETERMINING
ASSESSMENTS.

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Ch. 9