N.Y. ISC Law § 3231 — New York Code / Act ISC / Article 32 / Section 3231
Rating of individual and small group health insurance policies; approval of superintendent
Status: in_force

* § 3231. Rating of individual and small group health insurance\npolicies; approval of superintendent. (a) (1) No individual health\ninsurance policy and no group health insurance policy covering between\none and fifty employees or members of the group or between one and one\nhundred employees or members of the group for policies issued or renewed\non or after January first, two thousand sixteen exclusive of spouses and\ndependents, hereinafter referred to as a small group, providing hospital\nand/or medical benefits, including medicare supplemental insurance,\nshall be issued in this state unless such policy is community rated and,\nnotwithstanding any other provisions of law, the underwriting of such\npolicy involves no more than the imposition of a pre-existing condition\nlimitation if otherwise permitted by this article. (2) Any individual,\nand dependents of such individual, and any small group, including all\nemployees or group members and dependents of employees or members,\napplying for individual health insurance coverage, including medicare\nsupplemental coverage, or small group health insurance coverage,\nincluding medicare supplemental insurance, but not including coverage\nissued on or after January first, two thousand fourteen, specified in\nsubsection (l) of section three thousand two hundred sixteen, of this\narticle must be accepted at all times throughout the year for any\nhospital and/or medical coverage offered by the insurer to individuals\nor small groups in this state. (3) Once accepted for coverage, an\nindividual or small group cannot be terminated by the insurer due to\nclaims experience.  Termination of an individual or small group shall be\nbased only on one or more of the reasons set forth in subsection (g) of\nsection three thousand two hundred sixteen or subsection (p) of section\nthree thousand two hundred twenty-one of this article. Group hospital\nand/or medical coverage, including medicare supplemental insurance,\nobtained through an out-of-state trust covering a group of fifty or\nfewer employees, or between one and one hundred employees for policies\nissued or renewed on or after January first, two thousand sixteen, or\nparticipating persons who are residents of this state must be community\nrated regardless of the situs of delivery of the policy. Notwithstanding\nany other provisions of law, the underwriting of such policy may involve\nno more than the imposition of a pre-existing condition limitation if\npermitted by this article, and once accepted for coverage, an individual\nor small group cannot be terminated due to claims experience.\nTermination of an individual or small group shall be based only on one\nor more of the reasons set forth in subsection (p) of section three\nthousand two hundred twenty-one of this article.  (4) For the purposes\nof this section, "community rated" means a rating methodology in which\nthe premium for all persons covered by a policy form is the same based\non the experience of the entire pool of risks of all individuals or\nsmall groups covered by the insurer without regard to age, sex, health\nstatus, tobacco usage or occupation, excluding those individuals or\nsmall groups covered by medicare supplemental insurance.  For medicare\nsupplemental insurance coverage, "community rated" means a rating\nmethodology in which the premiums for all persons covered by a policy or\ncontract form is the same based on the experience of the entire pool of\nrisks covered by that policy or contract form without regard to age,\nsex, health status, tobacco usage or occupation.\n  (b) (1) The superintendent may set standard premium tiers and standard\nrating relativities between tiers applicable to all policies subject to\nthis section. The superintendent may set a standard relativity\napplicable to child-only policies issued pursuant to section 1302(f) of\nthe affordable care act, 42 U.S.C. § 18022(f). The relativity for\nchild-only policies shall be actuarially justifiable using the aggregate\nexperience of insurers to prevent the charging of unjustified premiums.\nThe superintendent may adjust such premium tiers and relativities\nperiodically based upon the aggregate experience of insurers. (2) An\ninsurer shall establish separate community rates for individuals as\nopposed to small groups. (3) If an insurer is required to issue a policy\nto individual proprietors pursuant to subsection (i) of this section,\nsuch policy shall be subject to subsection (a) of this section.\n  (c) (1) The superintendent shall permit the use of separate community\nrates for reasonable geographic regions, which may, in a given case,\ninclude a single county. The regions shall be approved by the\nsuperintendent as part of the rate filing. The superintendent shall not\nrequire the inclusion of any specific geographic regions within the\nproposed community rated regions selected by the insurer in its rate\nfiling so long as the insurer's proposed regions do not contain\nconfigurations designed to avoid or segregate particular areas within a\ncounty covered by the insurer's community rates. (2) Beginning on\nJanuary first, two thousand fourteen, for every policy subject to this\nsection that provides physician services, medical, major medical or\nsimilar comprehensive-type coverage, except for medicare supplement\nplans, insurers shall use standardized regions established by the\nsuperintendent.\n  (d) (1) Notwithstanding any other provision of this chapter to the\ncontrary, no policy form subject to this section shall be issued or\ndelivered, nor any insurance contract entered into, unless and until the\ninsurer has filed with the superintendent a schedule of premiums, not to\nexceed twelve months in duration, to be paid under the policy forms and\nobtained the superintendent's approval thereof. The superintendent may\nrefuse such approval if he or she finds that such premiums are\nexcessive, inadequate, or unfairly discriminatory. The superintendent\nmay consider the financial condition of such insurer in approving or\ndisapproving any premium. In determining whether to approve the schedule\nof premiums filed, the superintendent shall, subject to the provisions\nof section three thousand two hundred thirty-three of this article,\nconsider the prior experience of the insurer's community pool and the\ninsurer's projections relating to claim costs, utilization and\nadministrative expenses and shall not adjust the insurer's rates based\nupon the rates approved for other insurers.\n  (2) An insurer shall provide specific claims experience to a municipal\ncorporation, as defined in subsection (f) of section four thousand seven\nhundred two of this chapter, covered by the insurer under a community\nrated policy when the municipal corporation requests its claims\nexperience for purposes of forming or joining a municipal cooperative\nhealth benefit plan certified pursuant to article forty-seven of this\nchapter. Notwithstanding the forgoing provisions, no insurer shall be\nrequired to provide more than three years' claims experience to a\nmunicipal corporation making this request.\n  (e) (1) (A) An insurer desiring to increase or decrease premiums for\nany policy form subject to this section shall submit a rate filing or\napplication to the superintendent.\n  An insurer shall send written notice of the proposed rate adjustment,\nincluding the specific change requested, to each policy holder and\ncertificate holder affected by the adjustment on or before the date the\nrate filing or application is submitted to the superintendent. The\nnotice shall prominently include mailing and website addresses for both\nthe department of financial services and the insurer through which a\nperson may, within thirty days from the date the rate filing or\napplication is submitted to the superintendent, contact the department\nof financial services or insurer to receive additional information or to\nsubmit written comments to the department of financial services on the\nrate filing or application. The superintendent shall establish a process\nto post on the department's website, in a timely manner, all relevant\nwritten comments received pertaining to rate filings or applications.\nThe insurer shall provide a copy of the notice to the superintendent\nwith the rate filing or application. The superintendent shall\nimmediately cause the notice to be posted on the department of financial\nservices' website. The superintendent shall determine whether the filing\nor application shall become effective as filed, shall become effective\nas modified, or shall be disapproved. The superintendent may modify or\ndisapprove the rate filing or application if the superintendent finds\nthat the premiums are unreasonable, excessive, inadequate, or unfairly\ndiscriminatory, and may consider the financial condition of the insurer\nwhen approving, modifying or disapproving any premium adjustment. The\ndetermination of the superintendent shall be supported by sound\nactuarial assumptions and methods, and shall be rendered in writing\nbetween thirty and sixty days from the date the rate filing or\napplication is submitted to the superintendent. Should the\nsuperintendent require additional information from the insurer in order\nto make a determination, the superintendent shall require the insurer to\nfurnish such information, and in such event, the sixty days shall be\ntolled and shall resume as of the date the insurer furnishes the\ninformation to the superintendent. If the superintendent requests\nadditional information less than ten days from the expiration of the\nsixty days (exclusive of tolling), the superintendent may extend the\nsixty day period an additional twenty days to make a determination. The\napplication or rate filing will be deemed approved if a determination is\nnot rendered within the time allotted under this section. An insurer\nshall not implement a rate adjustment unless the insurer provides at\nleast sixty days advance written notice of the premium rate adjustment\napproved by the superintendent to each policy holder and certificate\nholder affected by the rate adjustment.\n  (B) The expected minimum loss ratio for a policy form subject to this\nsection, for which a rate filing or application is made pursuant to this\nparagraph, other than a medicare supplemental insurance policy, or, with\nthe approval of the superintendent, an aggregation of policy forms that\nare combined into one community rating experience pool and rated\nconsistent with community rating requirements, shall not be less than\neighty-two percent. In reviewing a rate filing or application, the\nsuperintendent may modify the eighty-two percent expected minimum loss\nratio requirement if the superintendent determines the modification to\nbe in the interests of the people of this state or if the superintendent\ndetermines that a modification is necessary to maintain insurer\nsolvency. No later than July thirty-first of each year, every insurer\nsubject to this subparagraph shall annually report the actual loss ratio\nfor the previous calendar year in a format acceptable to the\nsuperintendent. If an expected loss ratio is not met, the superintendent\nmay direct the insurer to take corrective action, which may include the\nsubmission of a rate filing to reduce future premiums, or to issue\ndividends, premium refunds or credits, or any combination of these.\n  (2) (A) Until September thirtieth, two thousand ten, as an alternate\nprocedure to the requirements of paragraph one of this subsection, an\ninsurer desiring to increase or decrease premiums for any policy form\nsubject to this section may instead submit a rate filing or application\nto the superintendent and such application or filing shall be deemed\napproved, provided that: (i) the anticipated minimum loss ratio for a\npolicy form shall not be less than eighty-two percent of the premium;\nand (ii) the insurer submits, as part of such filing, a certification by\na member of the American Academy of Actuaries or other individual\nacceptable to the superintendent that the insurer is in compliance with\nthe provisions of this paragraph, based upon that person's examination,\nincluding a review of the appropriate records and of the actuarial\nassumptions and methods used by the insurer in establishing premium\nrates for policy forms subject to this section. An insurer shall not\nutilize the alternate procedure pursuant to this paragraph to implement\na change in rates to be effective on or after October first, two\nthousand ten.\n  (B) Each calendar year, an insurer shall return, in the form of\naggregate benefits for each policy form filed pursuant to the alternate\nprocedure set forth in this paragraph at least eighty-two percent of the\naggregate premiums collected for the policy form during that calendar\nyear. Insurers shall annually report, no later than June thirtieth of\neach year, the loss ratio calculated pursuant to this paragraph for each\nsuch policy form for the previous calendar year. In each case where the\nloss ratio for a policy form fails to comply with the eighty-two percent\nloss ratio requirement, the insurer shall issue a dividend or credit\nagainst future premiums for all policy holders with that policy form in\nan amount sufficient to assure that the aggregate benefits paid in the\nprevious calendar year plus the amount of the dividends and credits\nshall equal eighty-two percent of the aggregate premiums collected for\nthe policy form in the previous calendar year. The dividend or credit\nshall be issued to each policy holder who had a policy which was in\neffect at any time during the applicable year. The dividend or credit\nshall be prorated based on the direct premiums earned for the applicable\nyear among all policy holders eligible to receive such dividend or\ncredit. An insurer shall make a reasonable effort to identify the\ncurrent address of, and issue dividends or credits to, former policy\nholders entitled to the dividend or credit. An insurer shall, with\nrespect to dividends or credits to which former policy holders that the\ninsurer is unable to identify after a reasonable effort would otherwise\nbe entitled, have the option, as deemed acceptable by the\nsuperintendent, of prospectively adjusting premium rates by the amount\nof such dividends or credits, issuing the amount of such dividends or\ncredits to existing policy holders, depositing the amount of such\ndividends or credits in the fund established pursuant to section four\nthousand three hundred twenty-two-a of this chapter, or utilizing any\nother method which offsets the amount of such dividends or credits. All\ndividends and credits must be distributed by September thirtieth of the\nyear following the calendar year in which the loss ratio requirements\nwere not satisfied. The annual report required by this paragraph shall\ninclude an insurer's calculation of the dividends and credits, as well\nas an explanation of the insurer's plan to issue dividends or credits.\nThe instructions and format for calculating and reporting loss ratios\nand issuing dividends or credits shall be specified by the\nsuperintendent by regulation. Such regulations shall include provisions\nfor the distribution of a dividend or credit in the event of\ncancellation or termination by a policy holder.\n  (3) All policy forms subject to this subsection, other than medicare\nsupplemental insurance policy forms, issued or in effect during calendar\nyear two thousand ten shall be subject to a minimum loss ratio\nrequirement of eighty-two percent. Insurers may use the alternate filing\nprocedure set forth in paragraph two of this subsection to adjust\npremium rates in order to meet the required minimum loss ratio for\ncalendar year two thousand ten. The rate filing or application shall be\nsubmitted no later than September thirtieth, two thousand ten.\n  (f) (1) In the case of disapproval or modification of a requested rate\nchange by more than twenty percent for any policy to which prior\napproval applies, the insurer shall have the right to request a hearing\nbefore the superintendent, or his or her representative, in order for\nthe insurer to present any evidence, arguments or other information as\nto why the insurer believes the superintendent's disapproval or\nmodification is not appropriate. Such hearing shall not be a required\ncondition prior to any challenge to the disapproval or modification\npursuant to the civil practice law and rules, but if an insurer\nchallenges the superintendent's disapproval or modification pursuant to\nthe civil practice law and rules, the insurer shall not be entitled to\nsuch hearing. An insurer entitled to such hearing must make a written\nrequest for such hearing no later than thirty days after the date of the\nsuperintendent's decision. The hearing shall be held as soon as\npracticable thereafter, but not sooner than twenty days from receipt of\nthe request for the hearing. A stenographic record of all hearings shall\nbe made. The superintendent shall provide the insurer with a written\nresponse to the insurer's presentation at the hearing no later than\nforty-five days after the date of the hearing. The superintendent's\nwritten response pursuant to this subsection shall be subject to\nchallenge as provided for in article seventy-eight of the civil practice\nlaw and rules.\n  (2) Such hearing shall not be required in any case where the\nsuperintendent returns the initial filing within thirty days on the\nbasis that the premium increase or decrease requested by the insurer is\nunreasonable.\n  (g) * (1) (A) This section shall also apply to policies issued to a\ngroup defined in subsection (c) of section four thousand two hundred\nthirty-five of this chapter, including but not limited to an association\nor trust of employers, if the group includes one or more member\nemployers or other member groups having one hundred or fewer employees\nor members exclusive of spouses and dependents. For a policy issued or\nrenewed on or after January first, two thousand fourteen, if the group\nincludes one or more member small group employers eligible for coverage\nsubject to this section, then such member employers shall be classified\nas small groups for rating purposes and the remaining members shall be\nrated consistent with the rating rules applicable to such remaining\nmembers pursuant to paragraph two of this subsection. (B) Subparagraph A\nof this paragraph shall not apply to either the renewal of a policy\nissued to a group or the issuance, between January first, two thousand\nsixteen and December thirty-first, two thousand sixteen, of a policy,\nand any renewal thereof, to a group, provided that the following three\nrequirements are met: (I) the group had been issued a policy that was in\neffect on July first, two thousand fifteen; (II) the group had member\nemployers, who, on or after July first, two thousand fifteen, have\nbetween fifty-one and one hundred employees, exclusive of spouses and\ndependents; and (III) the group is either: (i) comprised entirely of one\nor more municipal corporations or districts (as such terms are defined\nin section one hundred nineteen-n of the general municipal law); or (ii)\ncomprised entirely of nonpublic schools providing education in any grade\nfrom pre-kindergarten through twelfth grade.\n  * NB Effective until December 28, 2028\n  * (1) This section shall also apply to policies issued to a group\ndefined in subsection (c) of section four thousand two hundred\nthirty-five, including but not limited to an association or trust of\nemployers, if the group includes one or more member employers or other\nmember groups which have one hundred or fewer employees or members\nexclusive of spouses and dependents. For policies issued or renewed on\nor after January first, two thousand fourteen, if the group includes one\nor more member small group employers eligible for coverage subject to\nthis section, then such member employers shall be classified as small\ngroups for rating purposes and the remaining members shall be rated\nconsistent with the rating rules applicable to such remaining members\npursuant to paragraph two of this subsection.\n  * NB Effective December 28, 2028\n  (2) If a policy is issued to a group defined in subsection (c) of\nsection four thousand two hundred thirty-five of this chapter, including\nan association group, that includes one or more individual or individual\nproprietor members, for rating purposes the insurer shall include such\nmembers in its individual pool of risks in establishing premium rates\nfor such members.\n  (h) * (1) Notwithstanding any other provision of this chapter, no\ninsurer, subsidiary of an insurer, or controlled person of a holding\ncompany system may act as an administrator or claims paying agent, as\nopposed to an insurer, on behalf of small groups which, if they\npurchased insurance, would be subject to this section. No insurer may\nprovide stop loss, catastrophic or reinsurance coverage to small groups\nwhich, if they purchased insurance, would be subject to this section.\nProvided, however, the provisions of this paragraph shall not apply to:\n(A) the renewal of stop loss, catastrophic or reinsurance coverage\nissued and in effect on January first, two thousand fifteen to small\ngroups covering between fifty-one and one hundred employees or members\nof the group; and (B) the issuance between January first, two thousand\nsixteen and December thirty-first, two thousand sixteen, of stop loss,\ncatastrophic or reinsurance coverage, and any renewal thereof, to a\nsmall group covering between fifty-one and one hundred employees or\nmembers of the group, provided that such group had stop loss,\ncatastrophic or reinsurance coverage issued and in effect on January\nfirst, two thousand fifteen.\n  * NB Effective until December 28, 2028\n  * (1) Notwithstanding any other provision of this chapter, no insurer,\nsubsidiary of an insurer, or controlled person of a holding company\nsystem may act as an administrator or claims paying agent, as opposed to\nan insurer, on behalf of small groups which, if they purchased\ninsurance, would be subject to this section. No insurer, subsidiary of\nan insurer, or controlled person of a holding company may provide stop\nloss, catastrophic or reinsurance coverage to small groups which, if\nthey purchased insurance, would be subject to this section.\n  * NB Effective December 28, 2028\n  (2) This subsection shall not apply to coverage insuring a plan which\nwas in effect on or before December thirty-first, nineteen hundred\nninety-one and was issued to a group which includes member small\nemployers or other member small groups, including but not limited to\nassociation groups, provided that (A) acceptance of additional small\nmember employers (or other member groups comprised of fifty or fewer\nemployees or members, exclusive of spouses and dependents) into the\ngroup on or after June first, nineteen hundred ninety-two and before\nApril first, nineteen hundred ninety-four does not exceed an amount\nequal to ten percent per year of the total number of persons covered\nunder the group as of June first, nineteen hundred ninety-two, but\nnothing in this subparagraph shall limit the addition of larger member\nemployers; (B) (i) after April first, nineteen hundred ninety-four, the\ngroup thereafter accepts member small employers and member small groups\nwithout underwriting by any more than the imposition of a pre-existing\ncondition limitation as permitted by this article and the cost for\nparticipation in the group for all persons covered shall be the same\nbased on the experience of the entire pool of risks covered under the\nentire group, without regard to age, sex, health status or occupation;\nand (ii) once accepted for coverage, an individual or small group cannot\nbe terminated due to claims experience; (C) the insurer has registered\nthe names of such groups, including the total number of persons covered\nas of June first, nineteen hundred ninety-two, with the superintendent,\nin a form prescribed by the superintendent, on or before April first,\nnineteen hundred ninety-three and shall report annually thereafter until\nsuch groups comply with the provisions of subparagraph (B) of this\nparagraph; and (D) the types or categories of employers or groups\neligible to join the association are not altered or expanded after June\nfirst, nineteen hundred ninety-two.\n  (3) An insurer may apply to the superintendent for an extension or\nextensions of time beyond April first, nineteen hundred ninety-four in\nwhich to implement the provisions of this subsection as they relate to\ngroups registered with the superintendent pursuant to subparagraph (C)\nof paragraph two of this subsection; any such extension or extensions\nmay not exceed two years in aggregate duration, and the ten percent per\nyear limitation of subparagraph (A) of paragraph two of this subsection\nshall be reduced to five percent per year during the period of any such\nextension or extensions. Any application for an extension shall\ndemonstrate that a significant financial hardship to such group would\nresult from such implementation.\n  (i)(1) If an insurer issues coverage to an association group\n(including chambers of commerce), as defined in subparagraph (K) of\nparagraph one of subsection (c) of section four thousand two hundred\nthirty-five of this chapter, the insurer must issue the same coverage to\nindividual proprietors which purchase coverage through the association\ngroup as the insurer issues to groups which purchase coverage through\nthe association group; provided, however, that an insurer which, on the\neffective date of this subsection, is issuing coverage to individual\nproprietors not connected with an association group, may continue to\nissue such coverage provided that the coverage is otherwise in\naccordance with this subsection and all other applicable provisions of\nlaw.\n  (2) For coverage purchased pursuant to this subsection, through\nDecember thirty-first, two thousand thirteen, individual proprietors\nshall be classified in their own community rating category, provided\nhowever, up to and including December thirty-first, two thousand\nthirteen, the premium rate established for individual proprietors\npurchased pursuant to paragraph one of this subsection shall not be\ngreater than one hundred fifteen percent of the rate established for the\nsame coverage issued to groups. Coverage purchased or renewed pursuant\nto this subsection on or after January first, two thousand fourteen\nshall be classified in the individual rating category.\n  (3) An insurer may require members of the association purchasing\nhealth insurance to verify that all employees electing health insurance\nare legitimate employees of the employers, as documented on New York\nstate tax form NYS-45-ATT-MN or comparable documentation. In order to be\neligible to purchase health insurance pursuant to this subsection and\nobtain the same group insurance products as are offered to groups, a\nsole employee of a corporation or a sole proprietor of an unincorporated\nbusiness or entity must (A) work at least twenty hours per week, (B) if\npurchasing the coverage through an association group, be a member of the\nassociation for at least sixty days prior to the effective date of the\ninsurance policy, and (C) present a copy of the following documentation\nto the insurer or health plan administrator on an annual basis:\n  (i) NYS tax form 45-ATT, or comparable documentation of active\nemployee status;\n  (ii) for an incorporated business, the prior year's federal income tax\nSchedule C for an incorporated business subject to Subchapter S with a\nsole employee, federal income tax Schedule E for other incorporated\nbusinesses with a sole employee, a W-2 annual wage statement, or federal\ntax form 1099 with federal income tax Schedule F; or\n  (iii) for a business in business for less than one year, a cancelled\nbusiness check, a certificate of doing business, or appropriate tax\ndocumentation; and\n  (iv) such other documentation as may be reasonably required by the\ninsurer as approved by the superintendent to verify eligibility of an\nindividual to purchase health insurance pursuant to this subsection.\n  (4) Notwithstanding the provisions of item (I) of clause (i) of\nsubparagraph (K) of paragraph one of subsection (c) of section four\nthousand two hundred thirty-five of this chapter, for the purposes of\nthis section, an association group shall include chambers of commerce\nwith less than two hundred members and which are 501C3 or 501C6\norganizations.\n  * NB There are 2 § 3231's\n