Bill Text: NJ A3667 | 2024-2025 | Regular Session | Introduced
Bill Title: Permits dental service corporations to be subsidiaries of nonprofit parent companies.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Engrossed) 2024-12-12 - Reported from Senate Committee, 2nd Reading [A3667 Detail]
Download: New_Jersey-2024-A3667-Introduced.html
Sponsored by:
Assemblyman ROY FREIMAN
District 16 (Hunterdon, Mercer, Middlesex and Somerset)
SYNOPSIS
Permits dental service corporations to be subsidiaries of nonprofit parent companies.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning dental service corporations and amending P.L.1968, c.305.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 4 of P.L.1968, c.305 (C.17:48C-4) is amended to read as follows:
4. A nonprofit corporation organized
under Title 15 of the Revised Statutes for the purpose of establishing,
maintaining and operating a nonprofit dental service plan, as described in
section 2 (a) of [this
act] P.L.1968,
c.305 (C.17:48C-2), intending to do so as a dental service corporation
certified under and thereby subject to the provisions of [this act] P.L.1968,
c.305 (C.17:48C-1 et seq.), shall seek certification therefor by
application to the commissioner. The application of such a corporation shall
include a certified copy of its certificate of incorporation, a copy of its
by-laws certified by the lawful custodian of the original, and a statement in
such form and detail as the commissioner shall prescribe, showing its financial
condition, its proposed methods and places of operation, and such other matters
as the commissioner shall prescribe, signed and sworn to by its president and
secretary or other proper officers. If the commissioner is satisfied, on the
basis of examination or otherwise that such corporation is organized without
capital stock and not for pecuniary profit and has complied with the
requirements of [this
act] P.L.1968,
c.305 (C.17:48C-1 et seq.) and that its condition or methods of operation
are not such as would render its operations hazardous to the public or its
subscribers, the commissioner shall issue a certificate of authority to such
corporation as a dental service corporation of this State. A corporation to
which a certificate of authority has been issued under [this act] P.L.1968,
c.305 (C.17:48C-1 et seq.) thenceforth shall be subject in all its
activities to the provisions of [this
act] P.L.1968,
c.305
(C.17:48C-1 et seq.) as long as the certificate of authority as issued or
thereafter amended remains in effect. No change in, or amendment to, or
alteration in, addition to, or substitution of any document, instrument or
other papers so filed with the commissioner shall become operative or effective
until the same shall also have been filed with the commissioner in a similar
manner. No certificate of authority shall be issued to any corporation not
incorporated as a corporation without capital stock and not for pecuniary
profit under the laws of this State, or to any corporation which, prior to or
pending its application for such certificate, has solicited a subscriber or
issued a subscription certificate. No dental service corporation shall solicit
a subscriber or issue a subscription certificate until its board of trustees
has been fully constituted as provided in [this
act] P.L.1968,
c.305 (C.17:48C-1 et seq.).
Nothing in P.L.1968, c.305 (C.17:48C-1 et seq.) shall preclude a dental service corporation from being or becoming a subsidiary of a nonprofit holding company or other nonprofit parent that is not a dental service corporation, provided, that the dental service corporation shall otherwise remain subject to the provisions of P.L.1968, c.305 (C.17:48C-1 et seq.).
(cf: P.L.1968, c.305, s.4)
2. This act shall take effect on the first day of the sixth month next following its enactment.
STATEMENT
This bill amends the current law to permit dental service corporations to be or become subsidiaries of nonprofit parents. Under the current law, a dental service corporation is prohibited from spending more than 10 percent of its assets or more than 50 percent of its surplus, whichever is less, on investments. This puts dental service corporations at a disadvantage compared to other health insurance companies, despite the fact that dental service corporations have more predictable risks of loss and thus have less need for limiting the use of company funds.
Allowing dental service corporations to be or become subsidiaries of nonprofit parent companies, while still imposing all statutory requirements on the dental service corporations themselves, would give a nonprofit parent freedom to invest funds and be better able to help its dental service corporation subsidiary compete with larger health insurance companies that offer dental services. At the same time, the dental service corporation subsidiary would still have to comply with the "Dental Service Corporation Act of 1968," including the limitation on investing company funds. By amending the current law, this bill promotes competition in the dental service market and ensures that patients are still adequately protected.
