2023 New York Laws › ISC - Insurance › Article 11 - Licensing of Insurers › 1124 - Institutions of Higher Education Exempt; Certificate of Authority.

* §  1124.  Institutions  of  higher  education exempt; certificate of
authority. (a) For the purposes of this section:
(1) "Qualified actuary" means an actuary  who  is  a  member  in  good
standing  of  the American Academy of Actuaries or Society of Actuaries,
with experience in establishing rates for self-insured trusts  providing
health benefits or other similar experience.
(2)  "Institution  of  higher  education"  or  "institution"  means an
educational institution in this state that:
(A) admits as regular students only persons having  a  certificate  of
graduation   from   a  school  providing  secondary  education,  or  the
recognized equivalent  of  such  a  certificate,  or  persons  who  have
completed  a secondary school education in a home school setting that is
treated as a home school or private school under the laws of this state;
(B) is legally authorized within this state to provide  a  program  of
education beyond secondary education;
(C) provides an educational program for which the institution awards a
bachelor's degree, graduate degree, or professional degree;
(D) is a public or other nonprofit institution;
(E)  is  accredited  by  a nationally recognized accrediting agency or
association;
(F) is governed by the board of regents of this state; and
(G) maintains an endowment of at least one billion dollars.
(3) "Student" means a person enrolled  in  an  institution  of  higher
education and may include a postdoctoral fellow.
(4)  "Student  contract"  means  evidence  of  coverage furnished to a
student that sets forth all benefits  and  terms  and  conditions,  with
regard to a student health plan.
(5)  "Student  health  plan"  or  "plan"  means  any  self-funded plan
established or maintained by an institution of higher education for  the
purpose  of  providing  medical,  surgical,  or  hospital  services to a
student, the student's spouse or domestic partner, the  student's  child
or  children,  or  other  persons chiefly dependent upon the student for
support and maintenance.
(b) An institution of higher education shall not establish,  maintain,
or  otherwise  participate in a student health plan in this state unless
the institution obtains and maintains a certificate  of  authority  from
the superintendent pursuant to the provisions of this section.
(c)  Except  as  otherwise  provided  in  this section or a regulation
promulgated by the  superintendent,  an  institution  providing  a  plan
shall:
(1)   be  subject  to  all  consumer  protection  laws  applicable  to
corporations  organized  under  article  forty-three  of  this  chapter,
including  minimum  requirements  of article forty-three of this chapter
and regulations thereunder regarding benefits, contracts, and rates; and
(2) provide that its plan will have an expected loss ratio of not less
than eighty-two percent. In reviewing a rate filing or application by  a
plan,  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  plan solvency. No later than one hundred twenty days after the
close of a plan's fiscal year, a plan shall annually report  the  actual
loss  ratio  for the previous plan fiscal year in a format acceptable to
the  superintendent.  If  the  expected  loss  ratio  is  not  met,  the
superintendent  may direct the plan to take corrective action. Mandatory
uniform  student  administrative  health  fees  paid  by  the   students
irrespective  of  whether the student is a plan member to an institution

shall not be deemed to be included in the premiums paid by students  for
health benefit coverage under a plan.
(d)  An  institution  shall  file  an application for a certificate of
authority on such form as the superintendent may  prescribe,  and  shall
provide to the satisfaction of the superintendent the following:
(1)  a  copy of the student contract, including a table of the premium
rates charged or proposed to be charged;
(2) a report indicating the benefit  provisions,  premium  rates,  and
incurred medical losses associated with the institution's students under
the  insurance  policy  or contract insuring the institution's students,
for the three years prior to the date of the application;
(3)  the  most  recent   certified   independently-audited   financial
statement for the institution;
(4)  a  report  prepared  by  a  qualified  actuary  that supports the
proposed premiums for the plan;
(5) a copy of all agreements between  the  institution  and  any  plan
administrator, with regard to the student health plan;
(6) a pro-forma balance sheet, including actuarially determined claims
liabilities, and statement of revenue and expenses, including reasonably
projected  expenses,  medical  losses,  and  premiums  to  be charged to
students for the plan during the first three years;
(7) a narrative description of the:
(A)  accounting  methodology  that  the  institution   will   utilize,
including  a  description  of  the  separate  accounts  for revenues and
expenses, including medical and  hospital  expenses  and  administration
expenses,   reserves   for   claims   and  expenses  thereon,  including
incurred-but-not-reported,   unearned   premium   reserves,   contingent
reserves,   and   any   asset   accounts   (cash,  premiums  receivable,
investments) relevant to the  plan.  The  accounts  may  be  established
within  the institution's general accounting ledger system, provided the
general ledger accounts are clearly identifiable as  pertaining  to  the
plan, including any such accounts allocated to the plan;
(B)  billing  and  claim  payment  procedures, including the names and
contact information for those persons charged with  handling  accounting
and claims issues; and
(C)  any  compensation the institution will receive in connection with
the plan.
(8) copy of any stop-loss insurance policy issued or  proposed  to  be
issued  by  an  insurer  authorized  to  do the business of accident and
health insurance in this  state  or  is  a  health  service  corporation
organized under article forty-three of this chapter; and
(9) such other information as the superintendent may require.
(e)  Upon compliance with this section, the superintendent may issue a
certificate of authority to an applicant. Every certificate of authority
shall contain the name of the  certified  entity  and  its  home  office
address.  The  superintendent  shall  refuse  to  grant a certificate of
authority to an applicant that fails to meet the  requirements  of  this
section.  The  superintendent  may  refuse  to  issue any certificate of
authority if in the superintendent's judgment,  the  refusal  will  best
promote the interests of the people of this state.
Notice  of refusal shall be in writing and shall set forth the basis for
refusal. If the applicant submits a written request within  thirty  days
after  receipt  of  the notice of refusal, then the superintendent shall
conduct a hearing to give the applicant the opportunity  to  show  cause
why the refusal should not be made final.
(f)  In  order  to  obtain and maintain a certificate of authority, an
institution shall:
(1) file a complete application with the superintendent in  accordance
with subsection (d) of this section;
(2)  have within its own organization adequate resources and competent
personnel to administer the student health plan or, in order to  provide
such  administrative  services,  in whole or part, has contracted with a
person or entity to serve as a plan  administrator,  determined  by  the
institution  to  be qualified based upon written documentation furnished
to the institution,  provided  that  the  documentation  shall  be  made
available to the superintendent upon request;
(3)  establish  and  maintain  premium  rates  sufficient  to meet its
contractual obligations and to  satisfy  the  reserve  requirements  set
forth in subsection (h) of this section;
(4)  establish  and  maintain  a fair and equitable process for claims
review, dispute resolution, and appeal procedures, including arbitration
of rejected claims, and procedures for handling claims for  benefits  in
the   event   of   plan   dissolution,  that  are  satisfactory  to  the
superintendent and are subject to article forty-nine of this chapter;
(5) provide covered students with a student contract; and
(6) file all plan documents, including the summary  plan  description,
and  any  amendments  thereto,  with  the superintendent and receive the
superintendent's approval in accordance with this section.
(g) An institution that has received a certificate of authority  shall
file  with  the superintendent, for the superintendent's prior approval,
any amendments to the student contract, student health plan, or  premium
rates charged for the plan.
(h)(1)  An  institution  shall  establish  reserves  with  the amounts
necessary to satisfy all contractual obligations and liabilities of  the
plan,  including:  (A)  a  reserve  for  payment  of claims and expenses
thereon reported but not yet  paid,  and  claims  and  expenses  thereon
incurred  but  not  yet reported, which shall not be less than an amount
equal to twenty-five percent of expected incurred  claims  and  expenses
thereon  for  the  current  plan  year,  unless  a qualified actuary has
demonstrated to the superintendent's satisfaction that a  lesser  amount
shall  be  adequate;  (B)  a  reserve  for unearned premium equivalents,
computed pro-rata on the basis of the unexpired portion  of  the  policy
period;  and  (C)  a contingent reserve fund, established and maintained
for the sole purpose of satisfying unexpected obligations of the plan in
the event of termination of the plan, which shall not be less than  five
percent  of the annualized earned premium equivalents during the current
fiscal year of the plan.
(2) A qualified actuary may demonstrate that  a  lesser  amount  of  a
reserve  for payment of claims and expenses thereon reported but not yet
paid, and claims  and  expenses  thereon  incurred-but-not-yet-reported,
shall be adequate by showing that the institution has obtained a medical
stop-loss  insurance  policy  issued  by  an  insurer  authorized by the
superintendent to do the business of accident and  health  insurance  in
this  state  or  is a health service corporation organized under article
forty-three of this chapter. If at any time the reserve  funds  required
to  be  established  pursuant  to  this  section fall below the required
minimum amounts, then  the  institution  shall  immediately  notify  the
superintendent  of  such  impairment.  The  institution  shall  cure the
impairment within five business days.
(3) The assets  constituting  the  student  health  plan's  contingent
reserve fund shall consist solely of certificates of deposit issued by a
United  States  bank  and  payable  in  United  States  legal tender, or
securities representing investments of the types specified in paragraphs
one, two, three, eight,  and  ten  of  subsection  (a)  of  section  one
thousand  four  hundred  four of this chapter, or as otherwise expressly

permitted by the superintendent. Any interest  earned  or  capital  gain
realized  on  the  money  so  deposited  or invested shall accrue to and
become part of the  plan's  reserve  funds  or  contingent  reserve,  as
applicable.
(4)  The  plan's  assets,  liabilities,  income  and expenses shall be
accounted for separate and apart from  all  other  assets,  liabilities,
income  and  expenses  of  the university. The accounting for the plan's
contingent reserve fund shall show: (A) the purpose,  source,  date  and
amount  of  each sum paid into the fund; (B) the interest earned by such
fund; (C) capital gains or losses resulting from the sale of investments
of the plan's contingent reserve fund; (D) the order, purpose, date  and
amount  of  each  payment  from the contingent reserve fund; and (E) the
assets of the contingent  reserve  fund,  indicating  cash  balance  and
schedule of investments.
(5)  The  requirements  for  funding  of  the plan's reserves shall be
calculated using generally accepted accounting  principles.  Only  those
expenses  that  relate  to the plan shall be included in calculating the
requirements for funding of the plan's reserve funds. Expenses allocated
to the plan shall be allocated on an equitable basis in conformity  with
generally  accepted  accounting  principles  consistently  applied.  The
books, accounts, and records of the  plan  shall  be  maintained  as  to
clearly  and  accurately disclose the nature and details of all expenses
so as to support the reasonableness of such expenses.
(i)(1)  An  institution  of  higher  education  shall  file  with  the
superintendent within one hundred twenty days of the close of the plan's
fiscal year a report that contains:
(A)  an  annual  financial statement, verified by the oath of at least
two of the institution's principal officers, with  direct  knowledge  of
the  operations  of  the  student  health  plan,  showing  the financial
condition of the plan during the most recent fiscal year, in  accordance
with  law  and  generally  accepted  accounting  principles,  in  a form
prescribed by the superintendent;
(B) the identity of the qualified actuary utilized by the  institution
or  plan and the amount paid to the qualified actuary by the institution
or plan during its most recent fiscal year;
(C) the identities of the plan's ten largest vendors by payment amount
during its most recent fiscal year;
(D) the name and contact information of the person or entity appointed
by the institution to administer the student health plan;
(E) a pro-forma statement of projected revenue and expenses for health
benefits anticipated by the plan for the next twelve-month period of the
plan's operation, provided on a fiscal year;
(F) a detailed report of the operations and condition  of  the  plan's
reserve funds; and
(G) such other information as the superintendent may require.
(2)   An   institution   of  higher  education  shall  file  with  the
superintendent within one hundred  twenty  days  of  the  close  of  its
student   health   plan's   fiscal   year  the  most  recent  certified,
independently audited  financial  statement  for  the  institution.  The
statement  shall  include  an opinion of an independent certified public
accountant.  The  notes  to  the  financial  statement  shall  show  the
financial   results   of  the  student  health  plan  operations  and  a
description as to how the institution meets the reserve requirements  in
paragraph  one  of subsection (h) of this section, including the amounts
reported for each of the reserves, the  method  used  to  calculate  the
reserves,  and  the  change  in  the  reserves from the beginning of the
plan's fiscal year to the end of the plan's fiscal  year.  In  addition,
the  notes to financial statement shall detail the assets comprising the

contingent reserve fund to demonstrate compliance with paragraph one  of
subsection (h) of this section.
(3) An institution that fails to file any report or statement required
by  this  chapter,  or  fails  to  reply within thirty days to a written
inquiry by the superintendent in connection therewith shall, in addition
to other penalties provided by this chapter, be subject, upon due notice
and opportunity to be heard, to a penalty of up to one thousand  dollars
per  day  of  delay,  not  to exceed twenty-five thousand dollars in the
aggregate, for each such failure.
(j) The superintendent may, pursuant to section  three  hundred  nine,
three  hundred  ten,  three  hundred eleven, and three hundred twelve of
this chapter, and pursuant  to  the  financial  services  law,  make  an
examination  into  the  affairs  of  any  institution,  with regard to a
student  health  plan  issued  by  the  institution,  as  often  as  the
superintendent deems it expedient for the protection of the interests of
the  people  of  this  state.  The  expenses of every examination of the
affairs of  an  institution,  with  regard  to  a  student  health  plan
established or maintained by the institution, shall be borne and paid by
the  institution  so examined. The expenses of examination shall include
reimbursement for the compensation paid  for  the  services  of  persons
employed  by  the superintendent or by the superintendent's authority to
make such examination,  and  for  the  necessary  traveling  and  living
expenses of the person or persons making the examination.
(k)(1)  The  superintendent  may  suspend  or  revoke a certificate of
authority issued to an institution if the  superintendent  finds,  after
notice  and  hearing, that the institution has failed to comply with any
requirement imposed on it by the provisions of this chapter  and  if  in
the   superintendent's   judgment   such  suspension  or  revocation  is
reasonably necessary to protect the interests  of  the  people  of  this
state, including:
(A)  for  any  cause  that  would  be a basis for denial of an initial
application for such a certificate;
(B) failure to maintain the reserves required  by  subsection  (h)  of
this section; or
(C)  the  superintendent  finds  that  the  institution has refused to
produce its accounts, records, and files for examination or has  refused
to  cooperate  or  give  information  with respect to the affairs of the
student health plan or to perform any other legal obligation relating to
such an examination when required by the superintendent.
(2) Any certificate of  authority  suspended  or  revoked  under  this
subsection   shall   be  surrendered  to  the  superintendent,  and  the
institution shall notify all participating students of that decision  in
such  form and manner as the superintendent may prescribe, but not later
than ten days after receipt of notice of the  superintendent's  decision
requiring  suspension  or revocation. In addition, the institution shall
submit a plan for the  superintendent's  approval  for  winding  up  the
plan's affairs in an orderly manner designed to result in timely payment
of  all  benefits,  in  such  form  and manner as the superintendent may
prescribe.
(3) Notwithstanding subdivision two of  section  eighty-seven  of  the
public  officers  law,  all  final  decisions  to  suspend or revoke the
certificate of authority with regard to an institution shall be public.
(l) In any case in which an institution determines  that  there  is  a
reason  to  believe  that  the  student  health plan will terminate, the
institution shall so inform the superintendent at least sixty days prior
thereto, and shall  file  a  sworn  statement  with  the  superintendent
concerning  all  current  and  future liabilities under its discontinued
plan. The institution also shall submit a plan for the  superintendent's

approval for winding up the plan's affairs in an orderly manner designed
to  result in timely payment of all benefits, in such form and manner as
the superintendent may prescribe.
(m)(1)  Any  funds  of the institution, as they pertain to the student
health plan, shall be accounted for separate and apart  from  all  other
assets,  liabilities,  income  and expenses of the institution until all
plan benefits and other plan obligations have been satisfied. Until such
time, the institution shall continue to maintain and  fund  the  reserve
funds  required  to be established under subsection (h) of this section.
If at any time the superintendent determines that additional funds shall
be deposited in the reserve funds, then the institution shall  make  the
deposit within five days of the superintendent's determination.
(2)  If,  after  twenty-four  months,  or such longer period as deemed
necessary by the  superintendent,  all  plan  benefits  and  other  plan
obligations  have  been satisfied, the institution, upon approval by the
superintendent, shall no longer be required to  maintain  assets  within
the  plan's  reserve  funds  within  accounts  within  the institution's
general accounting ledger system.
(n) An institution shall not issue a stop-loss insurance policy.
(o)  The  superintendent  may  promulgate  such  regulations  as   the
superintendent  deems  necessary  to  implement  the  provisions of this
section and to ensure that the plans established under this section  are
in  the best interests of the students, students' spouses, the students'
children, and other persons chiefly  dependent  upon  the  students  for
support and maintenance.
(p)  Except  as otherwise provided in this section, any institution of
higher education that violates this section  shall  be  subject  to  the
penalties set forth in section one hundred nine of this chapter.
* NB There are 2 § 1124's