The Philippines Insurance Commission issued Circular Letter No. 2025-11 revising minimum capitalization, financial capacity and related prudential requirements for health maintenance organizations (HMOs), anchored on a new net worth tiering framework that links an HMO’s tier to its risk-taking limits, liquidity requirements and certain operational permissions. The circular sets Tier A for HMOs with net worth over PHP 500 million, Tier B for over PHP 100 million to PHP 500 million, Tier C for over PHP 50 million to PHP 100 million, and Tier D for PHP 50 million and below, while requiring existing HMOs to maintain net worths not lower than their actual paid-up capital. It retains paid-up capital minima of at least PHP 10 million for existing domestic HMOs and at least PHP 100 million for new entrants, with community-based and cooperative HMOs required to maintain at least 50% of the prescribed amounts for regular HMOs. The tiering system determines the maximum gross membership fee (GMF) risk an HMO may assume, capped at three times net worth for Tier D, five times for Tier C and ten times for Tier B, with no GMF risk limit for Tier A; GMF is defined as total annual fees from full-risk HMO agreements for a pre-agreed set of health services. HMOs must also maintain security deposits of at least 25% of actual paid-up capital or PHP 5 million, whichever is higher, invested only in specified Philippine public-sector bonds or other debt instruments (including those of the Bangko Sentral ng Pilipinas and government-owned or -controlled corporations) with maturities of at least one year from transfer to the Commission. Liquidity standards are stratified through minimum Acid Test Ratios of 1.0 for Tiers A and B, 1.75 for Tier C and 2.0 for Tier D, only Tiers A to C may invest in real property, and dividend declarations by Tiers A and B are allowed without prior approval subject to post-distribution reporting while Tiers C and D require prior approval.

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