Senate Commerce Committee Statement to Assembly, No. 3667 — State of New Jersey (December 12, 2024)

Summary

A Senate Commerce Committee statement to Assembly, No. 3667, State of New Jersey, dated December 12, 2024, reporting the bill favorably. The statement says the bill amends current law to permit dental service corporations to be or become subsidiaries of nonprofit parents. It explains that current law bars a dental service corporation from spending more than 10 percent of its assets or more than 50 percent of its surplus, whichever is less, on investments, and that a nonprofit parent would have freedom to invest funds. The subsidiary would still have to comply with the "Dental Service Corporation Act of 1968," including its limitation on investing company funds, according to the statement.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

ASSEMBLY,
No. 3667

STATE
OF NEW JERSEY

DATED: DECEMBER
12, 2024

The Senate Commerce Committee reports favorably
Assembly Bill No. 3667.

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.

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