(a) Statutory deposits made under Insurance Code §843.405 (concerning Deposit with Comptroller) consisting of certificates of deposit must be issued by a solvent, federally insured bank.
(b) Before issuance of the certificate of authority, the HMO must submit proof of statutory deposits satisfying the requirements of Insurance Code §843.405 and meeting the investment requirements of §11.802 of this title (relating to Minimum Net Worth), with a completed Statutory Deposit Transaction Form, Form No. FIN407 (rev. 11/15), and Declaration of Trust Form, Form No. FIN453 (rev. 11/15) as adopted in §13.562(b) of this title (relating to Deposit or Letter of Credit Required), as well as a safekeeping receipt showing that the security is pledged to the department, and the applicable fees under §7.1301(d) of this title (relating to Regulatory Fees) to the bond and securities officer of the department.
(c) Each HMO must annually determine the amount of statutory deposit required as specified in Insurance Code §843.405 and adjust the amount of statutory deposit by March 15 of that year.
(d) Any increases, decreases, or substitutions to the deposit funds must be in funds meeting the investment requirements of §11.802 of this title and must be accompanied by the documentation described in subsection (b) of this section.
(e) If the HMO wishes to request a waiver or release, or a waiver and a release, of all or part of the statutory deposit requirements under Insurance Code §843.405, then the request must provide adequate information, including the following, to justify the relief requested:
  (1) specification of the pertinent provisions of the Insurance Code under which the relief is being requested;
  (2) the amount of the statutory deposit for which the relief is being requested;
  (3) supporting documentation that justifies the relief requested including:
    (A) reasons for requesting the relief;
    (B) discussion of the impact of granting the relief requested and assurance that the HMO and its enrollees will not be harmed if the relief is granted; and
    (C) if a request is based on a guarantee:
      (i) a copy of the guarantee;
      (ii) a copy of the most current audited financial statements of the sponsoring organization, unless the sponsoring organization files financial statements with the National Association of Insurance Commissioners or the Securities Exchange Commission;
      (iii) disclosure of the number of guarantees that the sponsoring organization has issued; and
      (iv) disclosure of the dollar amount of all obligations guaranteed, the amounts reflected as liabilities, and the amounts guaranteed that are not reflected as liabilities in the sponsoring organization's consolidated financial statements;
  (4) if the request is based on projected uncovered expenses:
    (A) projections for the next calendar year, including an income statement, a balance sheet, a cash flow statement and enrollment, and assumptions on which the projections are based;
    (B) an explanation of why expenses are classified as "covered"; and
    (C) a reconciliation with explanation for any differences between submitted projections and the previous calendar year's actual experience;
  (5) if an HMO requests a release under Insurance Code §843.405(e) or (f):
    (A) evidence that the dollar amount of uncovered health care expenses are likely to continue and will not exceed the amount remaining on deposit; and
    (B) an explanation of the reasons for the decrease in uncovered health care expenses from that incurred during previous years;
  (6) if a waiver is granted by the commissioner, the assets supporting the uncovered medical expenses may be invested under §11.804(3) of this title (relating to Invested Assets).
(f) When the conditions on which a waiver was granted change to the extent that the HMO is no longer able to qualify for the waiver, the HMO must deposit adequate funds to comply with the requirements of Insurance Code §843.405 within 30 days.
(g) All interest income due on the statutory deposit funds may be paid directly to the HMO by the bank.

Source Note: The provisions of this §11.803 adopted to be effective August 1, 2017, 42 TexReg 2169