N.Y. Insurance Law § 3231: Rating of individual and small group health insurance policies; approval of superintendent

* § 3231. Rating of individual and small group health insurance

policies; approval of superintendent. (a) (1) No individual health

insurance policy and no group health insurance policy covering between

one and fifty employees or members of the group or between one and one

hundred employees or members of the group for policies issued or renewed

on or after January first, two thousand sixteen exclusive of spouses and

dependents, hereinafter referred to as a small group, providing hospital

and/or medical benefits, including medicare supplemental insurance,

shall be issued in this state unless such policy is community rated and,

notwithstanding any other provisions of law, the underwriting of such

policy involves no more than the imposition of a pre-existing condition

limitation if otherwise permitted by this article. (2) Any individual,

and dependents of such individual, and any small group, including all

employees or group members and dependents of employees or members,

applying for individual health insurance coverage, including medicare

supplemental coverage, or small group health insurance coverage,

including medicare supplemental insurance, but not including coverage

issued on or after January first, two thousand fourteen, specified in

subsection (l) of section three thousand two hundred sixteen, of this

article must be accepted at all times throughout the year for any

hospital and/or medical coverage offered by the insurer to individuals

or small groups in this state. (3) Once accepted for coverage, an

individual or small group cannot be terminated by the insurer due to

claims experience. Termination of an individual or small group shall be

based only on one or more of the reasons set forth in subsection (g) of

section three thousand two hundred sixteen or subsection (p) of section

three thousand two hundred twenty-one of this article. Group hospital

and/or medical coverage, including medicare supplemental insurance,

obtained through an out-of-state trust covering a group of fifty or

fewer employees, or between one and one hundred employees for policies

issued or renewed on or after January first, two thousand sixteen, or

participating persons who are residents of this state must be community

rated regardless of the situs of delivery of the policy. Notwithstanding

any other provisions of law, the underwriting of such policy may involve

no more than the imposition of a pre-existing condition limitation if

permitted by this article, and once accepted for coverage, an individual

or small group cannot be terminated due to claims experience.

Termination of an individual or small group shall be based only on one

or more of the reasons set forth in subsection (p) of section three

thousand two hundred twenty-one of this article. (4) For the purposes

of this section, "community rated" means a rating methodology in which

the premium for all persons covered by a policy form is the same based

on the experience of the entire pool of risks of all individuals or

small groups covered by the insurer without regard to age, sex, health

status, tobacco usage or occupation, excluding those individuals or

small groups covered by medicare supplemental insurance. For medicare

supplemental insurance coverage, "community rated" means a rating

methodology in which the premiums for all persons covered by a policy or

contract form is the same based on the experience of the entire pool of

risks covered by that policy or contract form without regard to age,

sex, health status, tobacco usage or occupation.

(b) (1) The superintendent may set standard premium tiers and standard

rating relativities between tiers applicable to all policies subject to

this section. The superintendent may set a standard relativity

applicable to child-only policies issued pursuant to section 1302(f) of

the affordable care act, 42 U.S.C. § 18022(f). The relativity for

child-only policies shall be actuarially justifiable using the aggregate

experience of insurers to prevent the charging of unjustified premiums.

The superintendent may adjust such premium tiers and relativities

periodically based upon the aggregate experience of insurers. (2) An

insurer shall establish separate community rates for individuals as

opposed to small groups. (3) If an insurer is required to issue a policy

to individual proprietors pursuant to subsection (i) of this section,

such policy shall be subject to subsection (a) of this section.

(c) (1) The superintendent shall permit the use of separate community

rates for reasonable geographic regions, which may, in a given case,

include a single county. The regions shall be approved by the

superintendent as part of the rate filing. The superintendent shall not

require the inclusion of any specific geographic regions within the

proposed community rated regions selected by the insurer in its rate

filing so long as the insurer's proposed regions do not contain

configurations designed to avoid or segregate particular areas within a

county covered by the insurer's community rates. (2) Beginning on

January first, two thousand fourteen, for every policy subject to this

section that provides physician services, medical, major medical or

similar comprehensive-type coverage, except for medicare supplement

plans, insurers shall use standardized regions established by the

superintendent.

(d) (1) Notwithstanding any other provision of this chapter to the

contrary, no policy form subject to this section shall be issued or

delivered, nor any insurance contract entered into, unless and until the

insurer has filed with the superintendent a schedule of premiums, not to

exceed twelve months in duration, to be paid under the policy forms and

obtained the superintendent's approval thereof. The superintendent may

refuse such approval if he or she finds that such premiums are

excessive, inadequate, or unfairly discriminatory. The superintendent

may consider the financial condition of such insurer in approving or

disapproving any premium. In determining whether to approve the schedule

of premiums filed, the superintendent shall, subject to the provisions

of section three thousand two hundred thirty-three of this article,

consider the prior experience of the insurer's community pool and the

insurer's projections relating to claim costs, utilization and

administrative expenses and shall not adjust the insurer's rates based

upon the rates approved for other insurers.

(2) An insurer shall provide specific claims experience to a municipal

corporation, as defined in subsection (f) of section four thousand seven

hundred two of this chapter, covered by the insurer under a community

rated policy when the municipal corporation requests its claims

experience for purposes of forming or joining a municipal cooperative

health benefit plan certified pursuant to article forty-seven of this

chapter. Notwithstanding the forgoing provisions, no insurer shall be

required to provide more than three years' claims experience to a

municipal corporation making this request.

(e) (1) (A) An insurer desiring to increase or decrease premiums for

any policy form subject to this section shall submit a rate filing or

application to the superintendent.

An insurer shall send written notice of the proposed rate adjustment,

including the specific change requested, to each policy holder and

certificate holder affected by the adjustment on or before the date the

rate filing or application is submitted to the superintendent. The

notice shall prominently include mailing and website addresses for both

the department of financial services and the insurer through which a

person may, within thirty days from the date the rate filing or

application is submitted to the superintendent, contact the department

of financial services or insurer to receive additional information or to

submit written comments to the department of financial services on the

rate filing or application. The superintendent shall establish a process

to post on the department's website, in a timely manner, all relevant

written comments received pertaining to rate filings or applications.

The insurer shall provide a copy of the notice to the superintendent

with the rate filing or application. The superintendent shall

immediately cause the notice to be posted on the department of financial

services' website. The superintendent shall determine whether the filing

or application shall become effective as filed, shall become effective

as modified, or shall be disapproved. The superintendent may modify or

disapprove the rate filing or application if the superintendent finds

that the premiums are unreasonable, excessive, inadequate, or unfairly

discriminatory, and may consider the financial condition of the insurer

when approving, modifying or disapproving any premium adjustment. The

determination of the superintendent shall be supported by sound

actuarial assumptions and methods, and shall be rendered in writing

between thirty and sixty days from the date the rate filing or

application is submitted to the superintendent. Should the

superintendent require additional information from the insurer in order

to make a determination, the superintendent shall require the insurer to

furnish such information, and in such event, the sixty days shall be

tolled and shall resume as of the date the insurer furnishes the

information to the superintendent. If the superintendent requests

additional information less than ten days from the expiration of the

sixty days (exclusive of tolling), the superintendent may extend the

sixty day period an additional twenty days to make a determination. The

application or rate filing will be deemed approved if a determination is

not rendered within the time allotted under this section. An insurer

shall not implement a rate adjustment unless the insurer provides at

least sixty days advance written notice of the premium rate adjustment

approved by the superintendent to each policy holder and certificate

holder affected by the rate adjustment.

(B) The expected minimum loss ratio for a policy form subject to this

section, for which a rate filing or application is made pursuant to this

paragraph, other than a medicare supplemental insurance policy, or, with

the approval of the superintendent, an aggregation of policy forms that

are combined into one community rating experience pool and rated

consistent with community rating requirements, shall not be less than

eighty-two percent. In reviewing a rate filing or application, the

superintendent may modify the eighty-two percent expected minimum loss

ratio requirement if the superintendent determines the modification to

be in the interests of the people of this state or if the superintendent

determines that a modification is necessary to maintain insurer

solvency. No later than July thirty-first of each year, every insurer

subject to this subparagraph shall annually report the actual loss ratio

for the previous calendar year in a format acceptable to the

superintendent. If an expected loss ratio is not met, the superintendent

may direct the insurer to take corrective action, which may include the

submission of a rate filing to reduce future premiums, or to issue

dividends, premium refunds or credits, or any combination of these.

(2) (A) Until September thirtieth, two thousand ten, as an alternate

procedure to the requirements of paragraph one of this subsection, an

insurer desiring to increase or decrease premiums for any policy form

subject to this section may instead submit a rate filing or application

to the superintendent and such application or filing shall be deemed

approved, provided that: (i) the anticipated minimum loss ratio for a

policy form shall not be less than eighty-two percent of the premium;

and (ii) the insurer submits, as part of such filing, a certification by

a member of the American Academy of Actuaries or other individual

acceptable to the superintendent that the insurer is in compliance with

the provisions of this paragraph, based upon that person's examination,

including a review of the appropriate records and of the actuarial

assumptions and methods used by the insurer in establishing premium

rates for policy forms subject to this section. An insurer shall not

utilize the alternate procedure pursuant to this paragraph to implement

a change in rates to be effective on or after October first, two

thousand ten.

(B) Each calendar year, an insurer shall return, in the form of

aggregate benefits for each policy form filed pursuant to the alternate

procedure set forth in this paragraph at least eighty-two percent of the

aggregate premiums collected for the policy form during that calendar

year. Insurers shall annually report, no later than June thirtieth of

each year, the loss ratio calculated pursuant to this paragraph for each

such policy form for the previous calendar year. In each case where the

loss ratio for a policy form fails to comply with the eighty-two percent

loss ratio requirement, the insurer shall issue a dividend or credit

against future premiums for all policy holders with that policy form in

an amount sufficient to assure that the aggregate benefits paid in the

previous calendar year plus the amount of the dividends and credits

shall equal eighty-two percent of the aggregate premiums collected for

the policy form in the previous calendar year. The dividend or credit

shall be issued to each policy holder who had a policy which was in

effect at any time during the applicable year. The dividend or credit

shall be prorated based on the direct premiums earned for the applicable

year among all policy holders eligible to receive such dividend or

credit. An insurer shall make a reasonable effort to identify the

current address of, and issue dividends or credits to, former policy

holders entitled to the dividend or credit. An insurer shall, with

respect to dividends or credits to which former policy holders that the

insurer is unable to identify after a reasonable effort would otherwise

be entitled, have the option, as deemed acceptable by the

superintendent, of prospectively adjusting premium rates by the amount

of such dividends or credits, issuing the amount of such dividends or

credits to existing policy holders, depositing the amount of such

dividends or credits in the fund established pursuant to section four

thousand three hundred twenty-two-a of this chapter, or utilizing any

other method which offsets the amount of such dividends or credits. All

dividends and credits must be distributed by September thirtieth of the

year following the calendar year in which the loss ratio requirements

were not satisfied. The annual report required by this paragraph shall

include an insurer's calculation of the dividends and credits, as well

as an explanation of the insurer's plan to issue dividends or credits.

The instructions and format for calculating and reporting loss ratios

and issuing dividends or credits shall be specified by the

superintendent by regulation. Such regulations shall include provisions

for the distribution of a dividend or credit in the event of

cancellation or termination by a policy holder.

(3) All policy forms subject to this subsection, other than medicare

supplemental insurance policy forms, issued or in effect during calendar

year two thousand ten shall be subject to a minimum loss ratio

requirement of eighty-two percent. Insurers may use the alternate filing

procedure set forth in paragraph two of this subsection to adjust

premium rates in order to meet the required minimum loss ratio for

calendar year two thousand ten. The rate filing or application shall be

submitted no later than September thirtieth, two thousand ten.

(f) (1) In the case of disapproval or modification of a requested rate

change by more than twenty percent for any policy to which prior

approval applies, the insurer shall have the right to request a hearing

before the superintendent, or his or her representative, in order for

the insurer to present any evidence, arguments or other information as

to why the insurer believes the superintendent's disapproval or

modification is not appropriate. Such hearing shall not be a required

condition prior to any challenge to the disapproval or modification

pursuant to the civil practice law and rules, but if an insurer

challenges the superintendent's disapproval or modification pursuant to

the civil practice law and rules, the insurer shall not be entitled to

such hearing. An insurer entitled to such hearing must make a written

request for such hearing no later than thirty days after the date of the

superintendent's decision. The hearing shall be held as soon as

practicable thereafter, but not sooner than twenty days from receipt of

the request for the hearing. A stenographic record of all hearings shall

be made. The superintendent shall provide the insurer with a written

response to the insurer's presentation at the hearing no later than

forty-five days after the date of the hearing. The superintendent's

written response pursuant to this subsection shall be subject to

challenge as provided for in article seventy-eight of the civil practice

law and rules.

(2) Such hearing shall not be required in any case where the

superintendent returns the initial filing within thirty days on the

basis that the premium increase or decrease requested by the insurer is

unreasonable.

(g) * (1) (A) This section shall also apply to policies issued to a

group defined in subsection (c) of section four thousand two hundred

thirty-five of this chapter, including but not limited to an association

or trust of employers, if the group includes one or more member

employers or other member groups having one hundred or fewer employees

or members exclusive of spouses and dependents. For a policy issued or

renewed on or after January first, two thousand fourteen, if the group

includes one or more member small group employers eligible for coverage

subject to this section, then such member employers shall be classified

as small groups for rating purposes and the remaining members shall be

rated consistent with the rating rules applicable to such remaining

members pursuant to paragraph two of this subsection. (B) Subparagraph A

of this paragraph shall not apply to either the renewal of a policy

issued to a group or the issuance, between January first, two thousand

sixteen and December thirty-first, two thousand sixteen, of a policy,

and any renewal thereof, to a group, provided that the following three

requirements are met: (I) the group had been issued a policy that was in

effect on July first, two thousand fifteen; (II) the group had member

employers, who, on or after July first, two thousand fifteen, have

between fifty-one and one hundred employees, exclusive of spouses and

dependents; and (III) the group is either: (i) comprised entirely of one

or more municipal corporations or districts (as such terms are defined

in section one hundred nineteen-n of the general municipal law); or (ii)

comprised entirely of nonpublic schools providing education in any grade

from pre-kindergarten through twelfth grade.

* NB Effective until December 28, 2028

* (1) This section shall also apply to policies issued to a group

defined in subsection (c) of section four thousand two hundred

thirty-five, including but not limited to an association or trust of

employers, if the group includes one or more member employers or other

member groups which have one hundred or fewer employees or members

exclusive of spouses and dependents. For policies issued or renewed on

or after January first, two thousand fourteen, if the group includes one

or more member small group employers eligible for coverage subject to

this section, then such member employers shall be classified as small

groups for rating purposes and the remaining members shall be rated

consistent with the rating rules applicable to such remaining members

pursuant to paragraph two of this subsection.

* NB Effective December 28, 2028

(2) If a policy is issued to a group defined in subsection (c) of

section four thousand two hundred thirty-five of this chapter, including

an association group, that includes one or more individual or individual

proprietor members, for rating purposes the insurer shall include such

members in its individual pool of risks in establishing premium rates

for such members.

(h) * (1) Notwithstanding any other provision of this chapter, no

insurer, subsidiary of an insurer, or controlled person of a holding

company system may act as an administrator or claims paying agent, as

opposed to an insurer, on behalf of small groups which, if they

purchased insurance, would be subject to this section. No insurer may

provide stop loss, catastrophic or reinsurance coverage to small groups

which, if they purchased insurance, would be subject to this section.

Provided, however, the provisions of this paragraph shall not apply to:

(A) the renewal of stop loss, catastrophic or reinsurance coverage

issued and in effect on January first, two thousand fifteen to small

groups covering between fifty-one and one hundred employees or members

of the group; and (B) the issuance between January first, two thousand

sixteen and December thirty-first, two thousand sixteen, of stop loss,

catastrophic or reinsurance coverage, and any renewal thereof, to a

small group covering between fifty-one and one hundred employees or

members of the group, provided that such group had stop loss,

catastrophic or reinsurance coverage issued and in effect on January

first, two thousand fifteen.

* NB Effective until December 28, 2028

* (1) Notwithstanding any other provision of this chapter, no insurer,

subsidiary of an insurer, or controlled person of a holding company

system may act as an administrator or claims paying agent, as opposed to

an insurer, on behalf of small groups which, if they purchased

insurance, would be subject to this section. No insurer, subsidiary of

an insurer, or controlled person of a holding company may provide stop

loss, catastrophic or reinsurance coverage to small groups which, if

they purchased insurance, would be subject to this section.

* NB Effective December 28, 2028

(2) This subsection shall not apply to coverage insuring a plan which

was in effect on or before December thirty-first, nineteen hundred

ninety-one and was issued to a group which includes member small

employers or other member small groups, including but not limited to

association groups, provided that (A) acceptance of additional small

member employers (or other member groups comprised of fifty or fewer

employees or members, exclusive of spouses and dependents) into the

group on or after June first, nineteen hundred ninety-two and before

April first, nineteen hundred ninety-four does not exceed an amount

equal to ten percent per year of the total number of persons covered

under the group as of June first, nineteen hundred ninety-two, but

nothing in this subparagraph shall limit the addition of larger member

employers; (B) (i) after April first, nineteen hundred ninety-four, the

group thereafter accepts member small employers and member small groups

without underwriting by any more than the imposition of a pre-existing

condition limitation as permitted by this article and the cost for

participation in the group for all persons covered shall be the same

based on the experience of the entire pool of risks covered under the

entire group, without regard to age, sex, health status or occupation;

and (ii) once accepted for coverage, an individual or small group cannot

be terminated due to claims experience; (C) the insurer has registered

the names of such groups, including the total number of persons covered

as of June first, nineteen hundred ninety-two, with the superintendent,

in a form prescribed by the superintendent, on or before April first,

nineteen hundred ninety-three and shall report annually thereafter until

such groups comply with the provisions of subparagraph (B) of this

paragraph; and (D) the types or categories of employers or groups

eligible to join the association are not altered or expanded after June

first, nineteen hundred ninety-two.

(3) An insurer may apply to the superintendent for an extension or

extensions of time beyond April first, nineteen hundred ninety-four in

which to implement the provisions of this subsection as they relate to

groups registered with the superintendent pursuant to subparagraph (C)

of paragraph two of this subsection; any such extension or extensions

may not exceed two years in aggregate duration, and the ten percent per

year limitation of subparagraph (A) of paragraph two of this subsection

shall be reduced to five percent per year during the period of any such

extension or extensions. Any application for an extension shall

demonstrate that a significant financial hardship to such group would

result from such implementation.

(i)(1) If an insurer issues coverage to an association group

(including chambers of commerce), as defined in subparagraph (K) of

paragraph one of subsection (c) of section four thousand two hundred

thirty-five of this chapter, the insurer must issue the same coverage to

individual proprietors which purchase coverage through the association

group as the insurer issues to groups which purchase coverage through

the association group; provided, however, that an insurer which, on the

effective date of this subsection, is issuing coverage to individual

proprietors not connected with an association group, may continue to

issue such coverage provided that the coverage is otherwise in

accordance with this subsection and all other applicable provisions of

law.

(2) For coverage purchased pursuant to this subsection, through

December thirty-first, two thousand thirteen, individual proprietors

shall be classified in their own community rating category, provided

however, up to and including December thirty-first, two thousand

thirteen, the premium rate established for individual proprietors

purchased pursuant to paragraph one of this subsection shall not be

greater than one hundred fifteen percent of the rate established for the

same coverage issued to groups. Coverage purchased or renewed pursuant

to this subsection on or after January first, two thousand fourteen

shall be classified in the individual rating category.

(3) An insurer may require members of the association purchasing

health insurance to verify that all employees electing health insurance

are legitimate employees of the employers, as documented on New York

state tax form NYS-45-ATT-MN or comparable documentation. In order to be

eligible to purchase health insurance pursuant to this subsection and

obtain the same group insurance products as are offered to groups, a

sole employee of a corporation or a sole proprietor of an unincorporated

business or entity must (A) work at least twenty hours per week, (B) if

purchasing the coverage through an association group, be a member of the

association for at least sixty days prior to the effective date of the

insurance policy, and (C) present a copy of the following documentation

to the insurer or health plan administrator on an annual basis:

(i) NYS tax form 45-ATT, or comparable documentation of active

employee status;

(ii) for an incorporated business, the prior year's federal income tax

Schedule C for an incorporated business subject to Subchapter S with a

sole employee, federal income tax Schedule E for other incorporated

businesses with a sole employee, a W-2 annual wage statement, or federal

tax form 1099 with federal income tax Schedule F; or

(iii) for a business in business for less than one year, a cancelled

business check, a certificate of doing business, or appropriate tax

documentation; and

(iv) such other documentation as may be reasonably required by the

insurer as approved by the superintendent to verify eligibility of an

individual to purchase health insurance pursuant to this subsection.

(4) Notwithstanding the provisions of item (I) of clause (i) of

subparagraph (K) of paragraph one of subsection (c) of section four

thousand two hundred thirty-five of this chapter, for the purposes of

this section, an association group shall include chambers of commerce

with less than two hundred members and which are 501C3 or 501C6

organizations.

* NB There are 2 § 3231's