N.Y. Insurance Law § 4326: Standardized health insurance contracts for qualifying small employers and individuals

§ 4326. Standardized health insurance contracts for qualifying small

employers and individuals. (a) A program is hereby established for the

purpose of making standardized health insurance contracts available to

qualifying small employers as defined in this section. Such program is

designed to encourage small employers to offer health insurance coverage

to their employees.

(b) Participation in the program established by this section and

section four thousand three hundred twenty-seven of this article is

limited to corporations or insurers organized or licensed under this

article or article forty-two of this chapter and health maintenance

organizations issued a certificate of authority under article forty-four

of the public health law or licensed under this article. Participation

by all health maintenance organizations is mandatory, provided, however,

that such requirements shall not apply to a holder of a special purpose

certificate of authority issued pursuant to section four thousand four

hundred three-a of the public health law or a health maintenance

organization exclusively serving individuals enrolled pursuant to title

eleven of article five of the social services law, title eleven-D of

article five of the social services law, title one-A of article

twenty-five of the public health law or title eighteen of the federal

Social Security Act. On and after January first, two thousand one, all

health maintenance organizations shall offer qualifying group health

insurance contracts as defined in this section. For the purposes of this

section and section four thousand three hundred twenty-seven of this

article, article forty-three corporations or article forty-two insurers

which voluntarily participate in compliance with the requirements of

this program shall be eligible for reimbursement from the stop loss

funds created pursuant to section four thousand three hundred

twenty-seven of this article under the same terms and conditions as

health maintenance organizations.

(c) The following definitions shall be applicable to the insurance

contracts offered under the program established by this section:

(1) (A) A qualifying small employer is an employer with:

(i) not more than fifty employees;

(ii) no group health insurance that provides benefits on an expense

reimbursed or prepaid basis covering employees in effect during the

twelve month period prior to application for a qualifying group health

insurance contract under the program established by this section; and

(iii) at least thirty percent of its employees receiving annual wages

from the employer at a level equal to or less than thirty thousand

dollars. The thirty thousand dollar figure shall be adjusted

periodically pursuant to subparagraph (D) of this paragraph.

(B) The twelve month period set forth in item (ii) of subparagraph (A)

of this paragraph may be adjusted by the superintendent from twelve

months to eighteen months if he determines that the twelve month period

is insufficient to prevent inappropriate substitution of qualifying

group health insurance contracts for other health insurance contracts.

(C) An employer shall cease to be a qualifying small employer if any

health insurance that provides benefits on an expense reimbursed or

prepaid basis covering an employer's employees, other than qualifying

group health insurance purchased pursuant to this section, is purchased

or otherwise takes effect subsequent to purchase of qualifying group

health insurance under the program established by this section.

(D) The wage levels utilized in subparagraph (A) of this paragraph

shall be adjusted annually, beginning in two thousand two. The

adjustment shall take effect on July first of each year. For July first,

two thousand two, the adjustment shall be a percentage of the annual

wage figure specified in subparagraph (A) of this paragraph. For

subsequent years, the adjustment shall be a percentage of the annual

wage figure that took effect on July first of the prior year. The

percentage adjustment shall be the same percentage by which the current

year's non-farm federal poverty level, as defined and updated by the

federal department of health and human services, for a family unit of

four persons for the forty-eight contiguous states and Washington, D.C.,

changed from the same level established for the prior year.

(2) A qualifying group health insurance contract is a group contract

purchased from a health maintenance organization, corporation or insurer

by a qualifying small employer that provides the benefits set forth in

subsection (d) of this section. The contract must insure not less than

fifty percent of the employees.

(d) A qualifying group health insurance contract shall provide

coverage for the essential health benefits package as defined in

paragraph three of subsection (e) of section four thousand three hundred

six-h of this article.

(d-1) Covered services shall not include drugs, procedures and

supplies for the treatment of erectile dysfunction when provided to, or

prescribed for use by, a person who is required to register as a sex

offender pursuant to article six-C of the correction law, provided that:

(1) any denial of coverage pursuant to this subsection shall provide the

enrollee with the means of obtaining additional information concerning

both the denial and the means of challenging such denial; (2) all drugs,

procedures and supplies for the treatment of erectile dysfunction may be

subject to prior authorization by corporations, insurers or health

maintenance organizations for the purposes of implementing this

subsection; and (3) the superintendent shall promulgate regulations to

implement the denial of coverage pursuant to this subsection giving

health maintenance organizations, corporations and insurers at least

sixty days following promulgation of the regulations to implement their

denial procedures pursuant to this subsection.

(d-2) No person or entity authorized to provide coverage under this

section shall be subject to any civil or criminal liability for damages

for any decision or action pursuant to subsection (d-1) of this section,

made in the ordinary course of business if that authorized person or

entity acted reasonably and in good faith with respect to such

information.

(d-3) Notwithstanding any other provision of law, if the commissioner

of health makes a finding pursuant to subdivision twenty-three of

section two hundred six of the public health law, the superintendent is

authorized to remove a drug, procedure or supply from the services

covered by the standardized health insurance contract established by

this section for those persons required to register as sex offenders

pursuant to article six-C of the correction law.

(e) A qualifying group health insurance contract shall provide a level

of coverage that is designed to provide benefits that are actuarially

equivalent to eighty percent of the full actuarial value of the benefits

provided under the plan. The superintendent shall standardize the

benefit package and cost sharing requirements of qualified group health

insurance contracts consistent with coverage offered through the health

benefit exchange established by this state.

(f) The mandated and make-available benefits set forth in sections

three thousand two hundred twenty-one of this chapter and four thousand

three hundred three of this article shall not be applicable to the

contracts issued pursuant to this section.

(g) A health maintenance organization, corporation or insurer must

offer the benefit package without change or additional benefits. A

qualifying small employer shall be issued the benefit package in a

qualifying group health insurance contract.

(h) A health maintenance organization, corporation or insurer shall

obtain from the employer written certification at the time of initial

application and annually thereafter ninety days prior to the contract

renewal date that such employer meets the requirements of a qualifying

small employer pursuant to this section. A health maintenance

organization, corporation or insurer may require the submission of

appropriate documentation in support of the certification.

(i) Applications for qualifying group health insurance contracts must

be accepted from any qualifying small employer at all times throughout

the year. The superintendent, by regulation, may require health

maintenance organizations, corporations or insurers to give preference

to qualifying small employers whose employees have the lowest average

salaries.

(j) A corporation shall not impose any pre-existing condition

limitation in a qualifying group health insurance contract.

(k) A qualifying small employer shall elect whether to make coverage

under the qualifying group health insurance contract available to

dependents of employees. Any employee or dependent who is enrolled in

Medicare is ineligible for coverage, unless required by federal law.

Dependents of an employee who is enrolled in Medicare will be eligible

for dependent coverage provided the dependent is not also enrolled in

Medicare.

(l) A qualifying small employer must pay at least fifty percent of the

premium for employees covered under a qualifying group health insurance

contract and must offer coverage to all employees receiving annual wages

at a level of thirty thousand dollars or less, and at least one such

employee shall accept such coverage. The thirty thousand dollar wage

level shall be adjusted periodically in accordance with subparagraph (D)

of paragraph one of subsection (c) of this section. The employer premium

contribution must be the same percentage for all covered employees.

(m) Premium rate calculations for qualifying group health insurance

contracts shall be subject to the following:

(1) coverage must be community rated and the superintendent shall set

standard rating tiers for family units and standard rating relativities

between tiers applicable to all contracts subject to this section; and

(2) beginning January first, two thousand fourteen, every policy

subject to this section shall use standardized regions established by

the superintendent; and

(3) claims experience under contracts issued to qualifying small

employers must be pooled with the health maintenance organization,

corporation or insurer's small group business for rate setting purposes.

(n) A health maintenance organization, corporation or insurer shall

submit reports to the superintendent in such form and at times as may be

reasonably required in order to evaluate the operations and results of

the standardized health insurance program established by this section.