N.J. Admin. Code § 11:15-3.13 - Establishment of trust fund accounts; transfers or withdrawals prohibited

(a) Pursuant to the terms of the indemnity and trust agreement, each fund shall establish a separate trust fund account in accordance with N.J.A.C. 11:15-3.6(b)6 from which monies shall be disbursed solely for the payment of claims, allocated claim expenses and stop-loss insurance or reinsurance premiums retained jointly on a self-insured basis. The accounts shall be designated as claims or loss retention fund accounts.

1. Other than for the purposes specified in (a) above, or as otherwise authorized by this subchapter, no withdrawals may be effected for a claim or loss retention fund without prior written approval of the Commissioner.

(b) A fund may establish by resolution a separate trust fund account for contingencies and may include as a part of its budget an assessment for this account. The resolution shall provide a formula for the equitable assessment of members for the account, specify the uses of the contingency account consistent with (b)2 below, and provide a formula for the equitable distribution and return of contingency funds to terminated or withdrawing members in accordance with the procedures and time frames of N.J.A.C. 11:15-3.2 0. Pursuant to N.J.A.C. 11:15-3.6(b)6 and 7, the fund shall maintain a separate contingency account for employer contributions and employee contributions for contributory or non-contributory group health insurance and term life insurance.

1. In any one year an assessment, transfer of surplus or any combination of assessments for and transfers to a contingency account shall not exceed 2.5 percent of the fund's current fiscal year earned income. The contingency accounts of a fund shall not exceed 10 percent of the fund's current fiscal year income. The annual and aggregate limitations on the amount of the contingency account set forth herein may be increased with the prior approval of the Commissioner.

2. By resolution, a fund may transfer funds from a contingency trust fund account to a claims or loss retention trust fund account to pay claims, allocated claim expenses, and reinsurance and stop-loss premiums in a fund year which has an inadequate cash balance. The transaction shall be accounted for as a permanent transfer, and the fund shall notify the Department within 30 days of any such transfers.

3. A fund shall not transfer funds to a claims or loss retention trust fund account from a contingency trust fund account if the transfer would result in a statutory deficit in the contingency trust fund account.

4. If a fund utilizes an amount equal to 2.5 percent or more of its current fiscal year income from a contingency account during a fiscal year, the joint insurance fund commissioners shall, within 10 days of such utilization, submit to the Commissioner and the Commissioner of the Department of Community Affairs a report on the causes of the utilization and the steps taken to prevent a recurrence of such circumstances.

5. The fund shall maintain accounting records on contingency accounts by fund year which shall include:

i. The sources of contributions to the contingency account;

ii. Transfers from the account to a claims or loss retention trust fund account by fund year;

iii. Interest earned, which shall be allocated by the average balance in the contingency account by fund year; and

iv. The pro-rata share of each participating member local unit allocable to each member.

Notes

N.J. Admin. Code § 11:15-3.13

Amended by R.1996 d.535, effective 11/18/1996.
See: 28 New Jersey Register 4036(a), 28 New Jersey Register 4885(a).