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General Laws

Section 9. Any dividend, its equivalent or other refunds or rate credits, accepted by the commission from the carrier or carriers, shall be deposited by the commission with the state treasurer and shall be maintained in a separate fund to be known as the group insurance commission trust fund. Using the net premium paid to the carrier or carriers as a basis of computation, the commission shall determine the pro rata share of such dividend, other refunds or rate credits which shall be allocable (1) to the commonwealth’s net share of the premium paid, and (2) to the federal or other funds contributed in the place of the commonwealth’s gross share of the premium cost, after deducting the pro rata administrative cost. The commission shall compute the pro rata administrative cost by determining the total administrative cost to the commonwealth of the entire insurance program authorized by this chapter which is applicable to the period for which the dividend, other refunds or rate credits have been received, and by using the commonwealth’s gross share of the premium cost as a basis, shall apply that portion of the total administrative cost which is applicable to federal or other funds contributed in place of the commonwealth’s gross share of the premium cost.

If, after applying the above formula, it is determined that the administrative cost allocable to the commonwealth is greater than the dividend, other refund or rate credits received, the entire amount thus received shall, upon authorization by the commission, be paid by the state treasurer into the General Fund, and the commission shall charge those departments, divisions and political subdivisions which have federal or other funds allocated to them for this purpose with said excess administrative cost.

Whenever the pro rata share of the dividend allocable to the federal or other funds contributed in place of the commonwealth’s gross share of the premium cost is in excess of the applicable administrative cost, the state treasurer, upon authorization by the commission, shall make payment to said funds of the amount of said excess dividend.

Whenever the pro rata share of the dividend allocable to the commonwealth’s net share of the premium paid is in excess of the total administrative cost plus the excess dividend, computed on the ratio of the net premium paid by the commonwealth to the total net premium paid to the carrier or carriers such sum shall, upon authorization by the commission, be paid by the state treasurer into the General Fund. The balance of the excess dividend which is the ratio of the net premium paid by the insured employees and retired employees to the total net premium paid to the carrier or carriers shall be retained in the group insurance commission trust fund to be invested on behalf of the insured employees and retired employees as authorized by the investment committee established in section nine A or disbursed on behalf of the insured employees and retired employees as determined by the commission.

Where the terms and conditions of a policy or policies of group life and accidental death and dismemberment insurance and group general or blanket hospital, surgical, medical, dental and other health insurance as authorized by this chapter provide for the establishment, revival or continuance of a special claims or rate stabilization reserve customarily developed by an insurance carrier on behalf of the commission from one or more periods of experience accounting and therefore not classified under this section as a dividend, its equivalent or other refund or rate credit, the commission, upon conclusion of the period of the contract or termination of such policy or policies, may transfer said reserve to the new policy or policies with the same or different insurance carrier or carriers, or, the commission may require the transfer of such reserves to its own custody and control in which event said reserves shall be deposited by the commission in the group insurance commission trust fund and maintained separately as a special claims or rate stabilization reserve subject to the conditions of investment and expenditure as provided in section nine A.

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