Massachusetts General Laws
Chapter 176p - Limited Societies
Section 40 - Deficiencies; Additional Contributions or Increased Rates of Contribution; Higher Rate Class of Members

Section 40. (a) If the stated periodical contributions of the members of any society subject to section 39 are insufficient to pay all reported death, disability, hospitalization and the medical service claims in full, and to provide for the creation and maintenance of the funds required by its by-laws or by this chapter, additional contributions or additional, increased or extra rates of contribution shall be collected from its members to meet the deficiency, as the by-laws of the society shall so provide. Such by-laws may provide that upon the written application or consent of the members, their certificates may be charged with its proportion of any deficiency disclosed by valuation, with interest not exceeding 5 per cent per annum.
(b) In rerating its members or for the purpose of placing itself on a sounder financial basis, any domestic society and any foreign society now admitted to this commonwealth, if it be not in conflict with the laws of its domicile, may, if ''legally solvent'' as set forth in section 39, establish by its constitution and by-laws a separate class of members who shall make mortuary contributions on the basis prescribed in section 8. All new members who from time to time join the society shall be assigned to such class, unless the new members elect otherwise. All present members may at their option be transferred at the prescribed rates to such class. The mortuary contributions of such class shall be placed in a separate account and used only for the benefit of the members of that class or of their beneficiaries. In the case of a society which has established such higher rate class whose contributions are held and used as set forth, the ''additional contributions'' or ''extra rates'' specified in this section shall be required only of the members of the class or classes respectively where the deficiency in contributions is apparent, and each class shall provide for its own deficiency. A class of a domestic society failing to do so shall be subject to the receivership provisions set forth in section 36. If a society can show, by an annual valuation, as provided in this section, that it is accumulating and maintaining for all of its members, who are not included in the separate class of members referred to in the tabular reserve required by a table of mortality not lower than the National Fraternal Congress Table of Mortality as adopted at the National Fraternal Congress on August 23, 1899, and 4 per cent interest, and which has provided for stated periodical mortuary contributions on said standard, then such society may abolish the segregation of members and funds required by this section. A foreign society which has legally established such a class in its home state and whose constitution or by-laws require the segregation and use of the mortuary contributions of its members as set forth in this section may be admitted to this commonwealth with respect to such class upon compliance with the laws of the commonwealth not in conflict with this provision.

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