As used in this article the following words and phrases shall have the meanings given to them in this section:

“Account.” Either of the two accounts created under section 1704.¹

“Association.” The Pennsylvania Life and Health Insurance Guaranty Association created under section 1704.

“Authorized assessment” or “authorized.” The term when used in the context of assessments means a resolution by the board of directors has been passed whereby an assessment will be called immediately or in the future from member insurers for a specified amount. An assessment is authorized when the resolution is passed.

“Benefit plan.” A specific employee, union or association of natural persons benefit plan.

“Called assessment” or “called.” The term when used in the context of assessments means that a notice has been issued by the association to member insurers requiring that an authorized assessment be paid within the time frame specified in the notice. An authorized assessment becomes a called assessment when notice is mailed by the association to member insurers.

“Commissioner.” The Insurance Commissioner of the Commonwealth.

“Contractual obligation.” Any obligation under a policy or contract or certificate under a group policy or contract or portion thereof for which coverage is provided under section 1703.²

“Covered policy” or “covered contract.” Any policy or contract within the scope of this article under section 1703.

“Department.” The Insurance Department of the Commonwealth.

“Employee Retirement Income Security Act of 1974” or “ERISA.” The Employee Retirement Income Security Act of 1974 (Public Law 93-406, 29 U.S.C. § 1001 et seq.).

“Extra contractual claims.” The term shall include claims relating to bad faith in the payment of claims, punitive or exemplary damages or attorney costs and fees.

“Health benefit plan.” Any hospital or medical expense policy or certificate, RANLI PPO policy or subscriber contract, hospital plan corporation, professional health services plan corporation or health maintenance organization subscriber contract or any other similar health contract. The term does not include:

(1) Accident only insurance.

(2) Credit insurance.

(3) Dental only insurance.

(4) Vision only insurance.

(5) Medicare supplement insurance.

(6) Benefits for long-term care, home health care, community-based care or any combination thereof.

(7) Disability income insurance.

(8) Coverage for on-site medical clinics.

(9) Specified disease, hospital confinement indemnity or limited benefit health insurance if the types of coverage do not provide coordination of benefits and are provided under separate policies or certificates.

“Health maintenance organization.” An organized system which combines the delivery and financing of health care and which provides basic health services to voluntarily enrolled subscribers for a fixed prepaid fee as defined in the act of December 29, 1972 (P.L. 1701, No. 364),³ known as the Health Maintenance Organization Act.

“Hospital plan corporation.” A not-for-profit corporation engaged in the business of maintaining and operating a nonprofit hospital plan as defined in 40 Pa.C.S. Ch. 61 (relating to hospital plan corporations).

“Impaired insurer.” A member insurer which, after the effective date of this article, is not an insolvent insurer and:

(1) is deemed by the Insurance Commissioner to be potentially unable to fulfill its contractual obligations; or

(2) is placed under an order of rehabilitation or conservation by a court of competent jurisdiction.

“Insolvent insurer.” A member insurer which, after the effective date of this article, is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

“Internal Revenue Code of 1986.” The Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

“Member insurer.” Any insurer, RANLI PPO, hospital plan corporation, professional health services plan corporation or health maintenance organization licensed or which holds a certificate of authority to transact in this Commonwealth any kind of insurance, RANLI PPO business, hospital plan corporation business, professional health services plan corporation business or health maintenance organization business for which coverage is provided under section 1703 and includes any insurer, RANLI PPO, hospital plan corporation, professional health services plan corporation or health maintenance organization whose license or certificate of authority in this Commonwealth may have been suspended, revoked, not renewed or voluntarily withdrawn. The term does not include any of the following:

(1) A fraternal benefit society.

(2) A mandatory State pooling plan.

(3) A mutual assessment company or any entity that operates on an assessment basis.

(4) An insurance exchange.

(5) An organization that is a qualified charity issuing only qualified charitable gift annuities exempt from regulation under the act of October 16, 1996 (P.L. 712, No. 127),⁴ known as the Charitable Gift Annuity Exemption Act.

(6) Any entity similar to any of the above.

“Moody's Corporate Bond Yield Average.” The Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor thereto.

“Owner.” The owner of a policy or contract. The terms “policyholder,” “contract holder,” “policy owner” and “contract owner” mean the person who is identified as the legal owner under the terms of the policy or contract or who is otherwise vested with legal title to the policy or contract through a valid assignment completed in accordance with the terms of the policy or contract and properly recorded as the owner on the books of the member insurer. The terms “owner,” “contract owner,” “policy owner,” “policyholder” and “contract holder” do not include persons with a mere beneficial interest in a policy or contract.

“Person.” Any individual, corporation, limited liability company, partnership, association, governmental body or entity or voluntary organization.

“Plan sponsor.” The term includes:

(1) the employer in the case of a benefit plan established or maintained by a single employer;

(2) the employee organization in the case of a benefit plan established or maintained by an employee organization; or

(3) in a case of a benefit plan established or maintained by two (2) or more employers or jointly by one or more employers and one or more employee organizations, the association, committee, joint board of trustees or other similar group of representatives of the parties that establishes or maintains the benefit plan.

“Premium or income tax.” The tax imposed under Article IV or IX of the act of March 4, 1971 (P.L. 6, No. 2),⁵ known as the Tax Reform Code of 1971.

“Premiums.” The amounts received on covered policies or contracts less premiums, considerations and deposits returned thereon and less dividends and experience credits thereon. The term does not include any amounts received for any policies or contracts or for the portions of any policies or contracts for which coverage is not provided under section 1703(b) except that assessable premium shall not be reduced on account of sections 1703(b)(2)(iii) relating to interest limitations and 1703(c)(1)(ii) relating to limitations with respect to any one individual, any one participant and any one policy or contract holder. The term does not include any premiums in excess of five million ($5,000,000) dollars on any unallocated annuity contract not issued under a governmental retirement plan established under section 401, 403(b) or 457 of the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.). The term does not include, with respect to multiple nongroup policies of life insurance owned by one owner, whether the policy or contract owner is an individual, firm, corporation or other person, and whether the persons insured are officers, managers, employees or other persons, premiums in excess of five million ($5,000,000) dollars with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

“Principal place of business.” The following apply:

(1) The principal place of business of a plan sponsor or a person other than a natural person means the single state in which the natural persons who establish policy for the direction, control and coordination of the operations of the entity as a whole primarily exercise that function, determined by the association in its reasonable judgment by considering all the following factors:

(i) The state in which the primary executive and administrative headquarters of the entity is located.

(ii) The state in which the principal office of the chief executive officer of the entity is located.

(iii) The state in which the board of directors or similar governing person or persons of the entity conducts the majority of its meetings.

(iv) The state in which the executive or management committee of the board of directors, or similar governing person or persons, of the entity conducts the majority of its meetings.

(v) The state from which the management of the overall operations of the entity is directed.

(vi) In the case of a benefit plan sponsored by affiliated companies comprising a consolidated corporation, the state in which the holding company or controlling affiliate has its principal place of business as determined using the factors under subparagraphs (i), (ii), (iii), (iv) and (v).

(2) If, in the case of a plan sponsor, more than fifty percent (50%) of the participants in the benefit plan are employed in a single state, that state shall be deemed to be the principal place of business of the plan sponsor.

(3) The principal place of business of a plan sponsor of a benefit plan described in paragraph (3) under the definition of plan sponsor in this section shall be deemed to be the principal place of business of the association, committee, joint board of trustees or other similar group of representatives of the parties who establishes or maintains the benefit plan that, in lieu of a specific or clear designation of a principal place of business, shall be deemed to be the principal place of business of the employer or employee organization that has the largest investment in the benefit plan in question.

“Professional health services plan corporation.” A person engaged in the business of maintaining and operating a nonprofit professional health service plan as defined in 40 Pa.C.S. Ch. 63 (relating to professional health services plan corporations).

“RANLI PPO.” An entity not licensed as an insurance company but assuming risk as defined in section 630.⁶

“Receivership court.” The court in the insolvent insurer's or impaired insurer's state having jurisdiction over the conservation, rehabilitation or liquidation of the member insurer.

“Resident.” Any person who resides in this Commonwealth at the time a member insurer is determined to be an impaired or insolvent insurer and to whom a contractual obligation is owed. A person may be a resident of only one state, which, in the case of a person other than a natural person, shall be its principal place of business. Citizens of the United States who are residents of foreign countries or residents of United States possessions, territories or protectorates that do not have an association similar to the association created by this article shall be deemed residents of the state of domicile of the member insurer that issued the policies or contracts.

“State.” A state, the District of Columbia, Puerto Rico, and a United States possession, territory or protectorate.

“Structured settlement annuity.” An annuity purchased in order to fund periodic payments for a plaintiff or other claimant in payment for or with respect to personal injury suffered by the plaintiff or other claimant.

“Supplemental contract.” Any agreement entered into for the distribution of policy or contract proceeds.

“Unallocated annuity contract.” Any annuity contract or group annuity certificate which is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by an insurer under such contract or certificate.