Nonprofit Medical Service Corporations

V.S.A. tit. 8, ch. 125

in effect

8 V.S.A. § 4581 Incorporation of medical service corporations

4581. Incorporation of medical service corporations (a) Three or more persons licensed by the State Board of Medical Practice to practice medicine and surgery may incorporate under the general law of this State governing corporations for the purpose of forming a medical service corporation, but subject to the provisions of section 4584 of this title. (b) Subject to the approval of the Commissioner, a medical service corporation may establish, maintain, and operate a hospital service plan as defined in section 4511 of this title. The Commissioner may refuse approval if the Commissioner finds that the rates submitted are excessive, inadequate, or unfairly discriminatory. The contracts of a medical service corporation that operates a hospital service plan under this subsection shall be governed by chapter 123 of this title to the extent that they provide for hospital service benefits, and by this chapter to the extent that the contracts provide for medical service benefits. Amended 1975, No. 69, § 3, eff. April 18, 1975; 1997, No. 54, § 6, eff. June 26, 1997.

8 V.S.A. § 4582 Incorporation of dental and other service corporations

4582. Incorporation of dental and other service corporations Three or more persons duly licensed under the laws of this State to practice dentistry, osteopathy, chiropractic, podiatry, or optometry may incorporate for the purpose of establishing a dental, osteopathic, chiropractic, podiatric, or optometric service corporation, respectively, to furnish dental, osteopathic, chiropractic, podiatric, or optometric services respectively, in the manner and subject to the restrictions specified in this chapter with respect to such corporation and consistent with the provisions of this chapter with reference to a medical service corporation organized under this chapter. Amended 2021, No. 105 (Adj. Sess.), § 212, eff. July 1, 2022.

8 V.S.A. § 4583 Purposes and definition

4583. Purposes and definition A medical service corporation is a nonprofit sharing corporation without capital stock, organized under the laws of this State for the purpose of establishing, maintaining, and operating a plan through which medical or medical and dental services may be provided at the expense of the corporation by duly licensed physicians and dentists to subscribers under contract, entitling each subscriber to certain medical services or medical and dental services as provided in the contract. Corporations formed under the provisions of this chapter shall have the privileges and be subject to the provisions of Title 11B as well as the applicable provisions of this chapter. In the event of a conflict between the provisions of Title 11B and the provisions of this chapter, the latter shall control. Amended 1997, No. 54, § 7, eff. June 26, 1997; 2021, No. 105 (Adj. Sess.), § 213, eff. July 1, 2022.

8 V.S.A. § 4584 Application for permit

4584. Application for permit (a) A corporation incorporated under this chapter shall immediately, after filing its articles of association, apply to the Commissioner of Financial Regulation for a permit to operate. The application shall be made to the Commissioner upon forms to be prescribed by the Commissioner. The application shall include a statement of the territory in which the corporation proposed to operate, the services to be furnished and rendered by it, and the rates to be charged for those services. The application shall be accompanied by two copies of any contract for medical services that the corporation proposes to make with its subscriber. Before issuing the permit, the Commissioner may make such examination or investigation as the Commissioner deems necessary. The Commissioner may refuse the permit if the Commissioner finds that the rates submitted are excessive, inadequate, or unfairly discriminatory. (b) A corporation organized under the provisions of this chapter shall not enter into a contract with a subscriber to furnish medical services until it has obtained from such Commissioner a permit to do so. (c) In connection with a rate decision, the Green Mountain Care Board may also make reasonable supplemental orders to the corporation and may attach reasonable conditions and limitations to such orders as the Board finds, on the basis of competent and substantial evidence, necessary to ensure that benefits and services are provided at minimum cost under efficient and economical management of the corporation. The Commissioner and, except as otherwise provided by 18 V.S.A. §§ 9375 and 9376, the Green Mountain Care Board, shall not set the rate of payment or reimbursement made by the corporation to any physician, hospital, or other health care provider. (d) The Commissioner shall permit rates for a medical service corporation designed to enable the corporation to accumulate and maintain a reserve fund that shall from time to time during the calendar year be increased in an amount equal to at least two percent of the annual premium income of the corporation until the reserve fund is equal to at least eight percent of the annual premium income of the corporation. However, if the liabilities of the corporation exceed its assets, the Commissioner shall permit the corporation to charge rates that enable the corporation to accumulate a reserve fund at the rate of at least five percent of annual premium income of the corporation until the corporation’s assets equal its liabilities. Nothing in this subchapter shall require the Commissioner to permit a corporation to accumulate a reserve fund until the law of the state of incorporation of that corporation is substantially similar to this subsection with respect to the reserve fund. Amended 1975, No. 69, § 4, eff. April 18, 1975; 1989, No. 225 (Adj. Sess.), § 25; 1995, No. 180 (Adj. Sess.), § 38; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2013, No. 79, § 5i, eff. Jan. 1, 2014; 2021, No. 105 (Adj. Sess.), § 214, eff. July 1, 2022.

8 V.S.A. § 4585 Required contract provisions

4585. Required contract provisions Contracts entered into by a medical service corporation shall be in writing, one copy of which shall be furnished to the subscriber. The contract shall contain the following provisions: (1) A statement of the amount payable to the corporation by the subscriber and the manner in which such amount is payable. (2) A statement of the nature of the services to be furnished and the period during which they will be furnished and if there are any services to be excepted, a detailed statement of the exceptions printed as specified in section 4586 of this chapter. (3) A statement of the terms and conditions upon which the contract may be canceled or otherwise terminated at the option of either party. (4) A statement that the contract includes the endorsements thereon and attached papers, if any, and contains the entire contract for services. (5) A statement that no representation by the subscriber in an application shall void the contract or be used in any legal proceeding under the contract unless such application or an exact copy of the application is included in or attached to the contract, and that no agent or representative of the corporation other than an officer or officers designated in the contract is authorized to change the contract or waive any of its provisions. (6) A statement that if the subscriber defaults in making any payment under the contract, the subsequent acceptance of a payment by the corporation or by any of its duly authorized agents shall reinstate the contract but, with respect to sickness and injury, only to cover such sickness as may be first manifested more than 10 days after the date of such acceptance. (7) A statement of the period of grace that will be allowed the subscriber for making any payment due under contract. The grace period shall be not less than 10 days. (8) A statement that the subscriber shall be entitled to engage the services of a physician or surgeon of the subscriber’s choosing to perform services covered by the contract, provided that the physician or surgeon is licensed by the State Board of Medical Practice and agrees to be governed by the bylaws of the corporation with respect to payment of fees for the physician’s or surgeon’s services. Amended 2021, No. 105 (Adj. Sess.), § 215, eff. July 1, 2022.

8 V.S.A. § 4585a Optometrists; visual services

4585a. Optometrists; visual services Whenever any policy of insurance or any medical service plan or hospital service contract or hospital and medical service contract provides for reimbursement for any visual service that is within the lawful scope of practice of a duly licensed optometrist with qualifications as defined by 26 V.S.A. § 1691, the insured or other person entitled to the benefits under the policy shall be entitled to reimbursement for the services, whether the services are performed by a duly licensed physician or by a duly licensed optometrist, whichever the insured selects. Notwithstanding any provision to the contrary in any statute or in any policy, plan, or contract, duly licensed optometrists shall be entitled to participate in such policies, plans, or contracts providing for visual services to the same extent as fully licensed physicians and no insurer shall make or permit any unfair discrimination against particular individuals or persons so licensed. 1971, No. 186 (Adj. Sess.), eff. March 30, 1972.

8 V.S.A. § 4586 Form and contents of contract

4586. Form and contents of contract In every such contract made, issued, or delivered in this State: (1) all printed portions shall be plainly printed in type of which the face is not smaller than 10 point; (2) there shall be a brief description of the contract on its first page and on its filing back in type of which the face is not smaller than 14 point; (3) the exceptions of the contract shall appear with the same prominence as the benefits to which they apply; and (4) if the contract contains any provision purporting to make any portion of the articles, constitution, or bylaws of the corporation a part of the contract, such portion thereof shall be set forth in full.

8 V.S.A. § 4587 Filing and approval of contracts

4587. Filing and approval of contracts A medical service corporation that has received a permit from the Commissioner of Financial Regulation under section 4584 of this title shall not thereafter issue a contract to a subscriber or charge a rate that is different from copies of the contracts and rates originally filed with and approved by the Commissioner at the time the permit was issued to the medical service corporation, until the medical service corporation has filed copies of its proposed contracts and rates and they have been approved by the Commissioner or the Green Mountain Care Board established in 18 V.S.A. chapter 220, as appropriate. Prior to approval, there shall be a public comment period pursuant to section 4026 of this title. Each such filing of a contract or rate shall be accompanied by payment to the Commissioner or the Board, as appropriate, of a nonrefundable fee of $150.00. A medical service corporation shall file a plain language summary of rate increases pursuant to section 4026 of this title. Added 1985, No. 236 (Adj. Sess.), § 11; 1989, No. 225 (Adj. Sess.), § 25; 1991, No. 166 (Adj. Sess.), § 11; 1995, No. 180 (Adj. Sess.), § 38; 2011, No. 48, § 15c, eff. Jan. 1, 2012; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2013, No. 79, § 5j, eff. Jan. 1, 2014; amended 2021, No. 105 (Adj. Sess.), § 216, eff. July 1, 2022; 2025, No. 11, § 7, eff. Sept. 1, 2025.

8 V.S.A. § 4588 Annual report to Commissioner

4588. Annual report to Commissioner Annually, on or before March 1, a medical service corporation shall file with the Commissioner of Financial Regulation a statement sworn to by the president and treasurer of the corporation showing its condition on December 31, which shall be in such form and contain such matters as the Commissioner shall prescribe. To qualify for the tax exemption set forth in section 4590 of this title, the statement shall include a certification that the medical service corporation operates on a nonprofit basis for the purpose of providing an adequate medical service plan to individuals of the State, both groups and nongroups, without discrimination based on age, gender, geographic area, industry, and medical history, except as allowed by 33 V.S.A. § 1811(f)(2)(B). Amended 1989, No. 225 (Adj. Sess.), § 25; 1991, No. 52, § 4, eff. June 6, 1991; 1995, No. 180 (Adj. Sess.), § 38; 2005, No. 191 (Adj. Sess.), § 53; 2011, No. 78 (Adj. Sess.), § 2, eff. April 2, 2012; 2019, No. 103 (Adj. Sess.), § 24; 2021, No. 105 (Adj. Sess.), § 217, eff. July 1, 2022; 2025, No. 11, § 8, eff. Sept. 1, 2025.

8 V.S.A. § 4589 Investments

4589. Investments Funds of a medical service corporation may be invested in any prudent investment as permitted for an insurance company formed under chapter 101 of this title. The corporation shall file and obtain the Commissioner’s prior approval of its investment guidelines. Any amendments to the investment guidelines must be approved by the Commissioner prior to use. Amended 1997, No. 54, § 8, eff. June 26, 1997.

8 V.S.A. § 4590 Tax exemption

4590. Tax exemption A medical service corporation shall be exempt from all forms of taxation except the health care claims tax assessed pursuant to 32 V.S.A. § 10402. Amended 2003, No. 70 (Adj. Sess.), § 4, eff. March 1, 2004; 2019, No. 6, § 68, eff. April 22, 2019.

8 V.S.A. § 4591 Effect on liability under workers’ compensation law

4591. Effect on liability under workers’ compensation law The provisions of this chapter or any contract for medical service shall in no way affect the liability of an employer under the provisions of the workers’ compensation law. Amended 1981, No. 165 (Adj. Sess.), § 1.

8 V.S.A. § 4592 Exempt organizations

4592. Exempt organizations Fraternal benefit societies and life or accident insurance companies are not affected by this chapter.

8 V.S.A. § 4593 Reciprocal provisions

4593. Reciprocal provisions A corporation organized under the laws of another state or country that, except as to state of organization, is a medical service corporation as defined by section 4583 of this title, and that the Commissioner finds has fully complied with the laws of such other state or country, shall be entitled to do business within this State subject to the provisions of this chapter after obtaining a permit as provided by section 4584 of this title. However, such a corporation organized under the laws of another state or country shall not be entitled to such permit, or to do business in this State unless such other state or country grants substantially similar rights and privileges to medical service corporations organized under the laws of this State. The Commissioner shall determine whether rights and privileges granted by other states or countries are substantially similar to those granted by this State, and his or her determination shall be final.

8 V.S.A. § 4594 Part-time employees

4594. Part-time employees A nonprofit medical service corporation shall not exclude part-time employees and shall offer the same insurance benefits to part-time employees as it offers to the employee groups of which the part-time employees would be members if they were full-time employees. The insurer shall offer to include the part-time employees as part of the employer’s employee group, at the full rate to be paid by the employer, at a rate prorated between the employer and the employee, or at the employee’s expense. “Part-time employee” means any employee who works a minimum of at least 17 1/2 hours per week. Added 1989, No. 34, § 3.

8 V.S.A. § 4595 Change in control; material transactions; redomestication; establishment or acquisition of control of insurance company subsidiary

4595. Change in control; material transactions; redomestication; establishment or acquisition of control of insurance company subsidiary (a)(1) No corporation permitted to engage in business under this chapter shall merge or consolidate with, sell, transfer, or exchange more than a 10-percent interest in the corporation or its assets to, or sell, transfer, or exchange more than 10 percent of its subscribers to, or otherwise transfer or commit more than a 10-percent interest in itself to, any other person, whether accomplished through one transaction or a series of transactions, without the Commissioner’s prior written approval. (2) No corporation permitted to engage in business under this chapter shall transfer its domicile to any other state or jurisdiction without the prior written approval of the Commissioner. (3) A corporation permitted to engage in business under this chapter shall obtain the Commissioner’s written approval prior to establishing or acquiring control of a for-profit or not-for-profit entity that is authorized to engage in the business of insurance under chapter 101 or chapter 139 of this title or the insurance law of any other U.S. jurisdiction. For purposes of this subdivision, “control” shall have the same meaning as in subdivision 3681(3) of this title. In addition to any other investment limitations established pursuant to this title, investments in entities authorized to engage in the business of insurance under chapter 101 or 139 of this title or the insurance law of any other U.S. jurisdiction shall be limited to 25 percent of total assets of the nonprofit medical services corporation in the aggregate; provided, however, that this limitation shall exclude investments in existence on May 1, 2004. (b) A corporation shall make application to the Commissioner for approval of any transaction set forth in subsection (a) of this section describing in detail the proposed transaction and identifying the parties involved. The Commissioner may require the filing of additional information as the Commissioner finds necessary or appropriate for the full consideration of the application. The applicant shall establish to the Commissioner’s satisfaction that the transaction meets the general good of the State. To the extent applicable in the circumstances, the Commissioner shall consider, but is not limited to, the following factors in the general good determination: (1) whether, after the transaction, the corporation continues to satisfy the requirements for a permit to do business under this chapter; (2) whether the effect of the transaction would be to substantially lessen competition in health insurance in this State or tend to create a monopoly in health insurance in this State; (3) whether the financial condition of any acquiring or acquired party is such as might jeopardize the financial stability of the corporation or prejudice the interest of its subscribers; (4) whether the transaction contemplates the liquidation of the corporation or any other material change in its business or corporate structure or management, that would be unfair or unreasonable to its subscribers or not in the public interest; (5) whether the competence, experience, and integrity of those persons who would control the operation of the new entity, or the acquiring or acquired party are such that it would not be in the interest of the public to permit the transaction; (6) whether the transaction will promote cost-effective, high-quality health care in the State; and (7) such other factors as the Commissioner deems relevant to the transaction. (c) The Commissioner shall investigate and hold at least one public hearing on the application. The public hearing shall be held within 30 days of the filing of a complete application with the Commissioner, and at least 20 days’ notice thereof shall be given by the Commissioner to the person filing the application and the office of the Attorney General. The applicant shall give seven days’ notice to any person as ordered by the Commissioner. The Commissioner may order such public notice as may be deemed necessary for full consideration of the transaction. The Commissioner shall make a determination within 30 days after the conclusion of such hearing. If a determination of general good is made, the Commissioner shall give the corporation a certificate to that effect. In the event of conflict between the provisions of section 3305 or 3683 of this title and the provisions of this section, the provisions of this section shall control. (d) The Commissioner may consider the review or portion of a review of the transaction by the insurance department of another state, district, or territory of the United States if the Commissioner finds that the review or portion of review conducted by the other jurisdiction is substantially similar in nature and scope as a review or portion of review under this section. (e) Any corporation permitted to engage in business under this chapter may, upon the approval of the Commissioner under subsections (a) and (b) of this section, and in compliance with such conditions as may be imposed by the Commissioner, transfer its domicile, in accordance with the laws thereof, to any other state or jurisdiction, and upon such a transfer, it shall cease to be a domestic corporation and its corporate or other legal existence in this State shall cease upon the filing of proof of such redomestication with the Secretary of State and upon payment to the Secretary of State of a filing fee in the amount of $100.00. Such corporation shall be permitted to do business in this State under this chapter as a foreign corporation, upon compliance with the qualification requirements for foreign corporations under section 4593 of this title. The Commissioner may require any corporation redomesticating under this section to form an adequately capitalized affiliate or subsidiary corporation under this chapter, whenever the Commissioner determines that such a requirement is in the best interests of members or subscribers and will promote the general good of the State. (f) A for profit or not for profit entity established or acquired with the Commissioner’s approval granted under this section shall be governed by the provisions of chapter 101 or 139 of this title, as applicable, and not the provisions of this chapter, other than this section. (g) Nothing in this section shall be construed to limit any common law authority of the Attorney General with respect to a nonprofit health care conversion, nor shall this section be construed to limit the application of Title 11B to any transaction reviewable under this section. (h) Any application filed with the Commissioner under this section shall be accompanied by a fee of $10.00. Added 1997, No. 54, § 9, eff. June 26, 1997; amended 2003, No. 163 (Adj. Sess.), § 42, eff. June 10, 2004; 2021, No. 105 (Adj. Sess.), § 218, eff. July 1, 2022.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/08/125Fetched: 10/21/2026