NY Ins L § 3231 (2021)
2021 New York Laws ISC - Insurance Article 32 - Insurance Contracts - Life, Accident and Health, Annuities 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, 2025   * (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, 2025  (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, 2025   * (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, 2025  (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