Senate Commerce Committee Statement to Senate, No. 1138 — State of New Jersey (December 12, 2024)

Summary

A Senate Commerce Committee statement to the Senate on Senate Bill No. 1138, State of New Jersey, dated December 12, 2024, reporting the bill favorably. The bill permits dental service corporations to be or become subsidiaries of nonprofit parents. The statement says 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. It states that a nonprofit parent would be freer to invest funds, while the subsidiary would still have to comply with the "Dental Service Corporation Act of 1968," including the limit on investing company funds.

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SENATE COMMERCE COMMITTEE

STATEMENT TO

SENATE, No.
1138

STATE
OF NEW JERSEY

DATED: DECEMBER
12, 2024

The Senate Commerce Committee reports favorably Senate
Bill No. 1138.

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.

This bill was pre-filed for introduction in the
2024-2025 session pending technical review. As reported, the bill includes the
changes required by technical review, which has been performed.

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