New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter III - Policy and Certificate Provisions › Subchapter A - Life, Accident and Health Insurance › Part 52 - Minimum Standards For Form, Content And Sale Of Health Insurance, Including Standards Of Full And Fair Disclosure › Section 52.1 - Preamble

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Health
				  insurance provides the mechanism through which most people purchase or pay for
				  their health care. Good health care is facilitated by an insurance mechanism
				  which helps the consumer make an informed choice as to the best coverage
				  available to meet the health care needs of himself and his family.
(b) At present, thousands of varieties of
				  insurance policies, offering various kinds of insurance protection against the
				  financial cost of sickness, accidents and disability, are sold by insurance
				  companies in New York State. The only policies allowed by this regulation
				  represent real efforts to improve coverage available to the general public, or
				  represent policies that are "tailor-made" to fit the needs of particular
				  policyholders.
(c) The insurance
				  industry should be encouraged to provide new forms of coverage and new ways of
				  reducing health care costs. But innovations should provide health care benefits
				  of real economic value. Health insurance policies designed merely to produce
				  superficial differences or play upon people's fears of particular diseases, and
				  insurance policies which are unduly complex or unduly limited, do not
				  meaningfully expand consumer choice, but instead serve to confuse and make
				  intelligent choice more difficult. Those coverages which are of no substantial
				  economic benefit or are contrary to the health care needs of the public, or
				  contain provisions which serve only to confuse or obfuscate, are prohibited by
				  this Part.
(d) In order to assist
				  health insurance consumers in New York State to better understand and evaluate
				  the benefits provided in the policies offered by licensed insurers in this
				  State, insurers are required to make a full and fair disclosure of policy
				  benefits based upon minimum standards contained in this Part.
(e) To facilitate the administrative
				  supervision of this Part, as well as other related insurance requirements,
				  existing rules in the form of guidelines for the submission and approval of
				  policy forms are incorporated in this Part.
(f) Recognizing that, as part of the contract
				  approval process, the Superintendent of Insurance has a statutory duty to
				  assure that health insurance benefits are reasonable in relation to the
				  premiums charged, procedures and requirements for the filing of premium rates
				  have been incorporated into this Part. One method of determining whether
				  benefits are reasonable, in relation to the premium charged, is to determine
				  the percentage of the premium collected which is expected to be returned to all
				  policy-holders in the form of benefits. This percentage of return is known as
				  the expected loss ratio. In order to prevent the insurer from retaining an
				  unreasonable percentage of the premiums collected for expenses, commissions and
				  profit, minimum expected loss ratio standards have been established.
(g) Knowing that the policy premium to be
				  charged by an insurer is an overriding concern of the health insurance
				  consumer, and that the consumer should be made aware of what percentage of the
				  premium the insurer intends to return in the form of benefits to all of the
				  policyholders buying that contract, disclosure of the expected benefit ratio is
				  required in the disclosure statement.
(h) When the premium rates are filed and
				  eventually approved as part of the department's approval of the contract, the
				  representation by the insurer as to the expected future loss ratio of that
				  contract is an important factor in obtaining department approval and is the
				  basis for the department's conclusion that benefits are reasonable in relation
				  to the premium charged. Because actuarial science is not exact, and unforeseen
				  factors can cause change in the insurer's assumptions, the department permits
				  increases in the premium rates originally filed, when the insurer reserves the
				  right to change premiums.
(i) The
				  department has found, however, that many companies that filed anticipated loss
				  ratios in the past, and received contract and rate approval on the basis of
				  those anticipated loss ratios, never experienced loss ratios even close to the
				  department's minimums and took no action to correct the situation by reducing
				  premiums, increasing benefits, refunding premiums or paying dividends. In order
				  to be certain that insurers do take appropriate action to fairly treat
				  purchasers of health insurance contracts where reasonable expected loss ratios
				  are not met, a procedure for monitoring of loss ratios has been established, as
				  well as requirements for insurer action by filing a corrective plan with the
				  department.
(j) The superintendent,
				  having the general authority to prescribe regulations not inconsistent with the
				  provisions of the Insurance Law and the specific authority to issue regulations
				  establishing minimum standards for the form, content and sale of health
				  insurance policies and having received a certification from the Commissioner of
				  Health in accordance with section 3217  of the Insurance Law recommending
				  elimination of certain provisions relating to the sale of such policies which
				  are contrary to the health care needs of the public, has established the rules
				  set forth in section
				  52.27 
				  of this Part, applicable to policies or contracts providing hospital and/or
				  medical expense or indemnity benefits. The Commissioner of Health has
				  specifically certified that "... the use of tests for the detection of the
				  human immunodeficiency virus, its antibody or antigen by insurers selling
				  health insurance policies or contracts, is contrary to the health care needs of
				  the public...". In promulgating these rules, the superintendent has taken into
				  account that the human immunodeficiency virus (HIV) test is not a diagnostic
				  test for AIDS; that the conclusions to be drawn from the test are not
				  dispositive of a diagnosis of AIDS; that health insurance coverage is essential
				  to one's health and welfare; that denial of health insurance is a most serious
				  consequence of a testing procedure which indicates only exposure to a virus;
				  and that the certification of the Commissioner of Health identifying the unique
				  nature of the public health problems created by AIDS is persuasive and bears
				  directly on the health care needs of the public. In view of the evolving data
				  concerning testing for AIDS, the superintendent will periodically request from
				  the Commissioner of Health a review of his May 1, 1987 certification.
(k) The Medicare Catastrophic Coverage Act of
				  1988 made significant changes in the benefits provided under Medicare beginning
				  January 1, 1989. The benefit changes are phased in over a time period running
				  through 1993. The Superintendent of Insurance has promulgated new minimum
				  standards for Medicare supplement insurance to be effective in 1989. Minimum
				  standards for 1990 will be promulgated by the department in 1989 after the
				  superintendent has had an opportunity to review and evaluate suggestions and
				  recommendations requested from consumers, other governmental agencies,
				  providers and insurers concerning the appropriate level of Medicare supplement
				  insurance minimum standards for 1990 and beyond.
(l) The Medicare Catastrophic Coverage Act of
				  1988 made significant changes in the benefits provided under Medicare beginning
				  January 1, 1989. The benefit changes are phased in over a time period running
				  through 1993. The Superintendent of Insurance promulgated minimum standards for
				  Medicare supplement insurance for 1989 and the Ninth Amendment to Regulation
				  No. 62 completes changes in the minimum standards for Medicare supplement
				  insurance necessary for compliance with the Medicare Catastrophic Coverage Act
				  of 1988 and addresses other areas of concern with respect to this type of
				  insurance.
(m) As a result of the
				  changes in the benefits provided under Medicare that were made pursuant to the
				  Medicare Catastrophic Coverage Act of 1988, the Superintendent of Insurance
				  promulgated new minimum standards for Medicare supplement insurance in the
				  Eighth and Ninth Amendments to Regulation No. 62. In November, 1989, it became
				  clear that Congress was considering action to repeal or modify the Medicare
				  Catastrophic Coverage Act of 1988. Anticipating Congressional action, the
				  Superintendent of Insurance promulgated the Twelfth Amendment to Regulation No.
				  62 which repealed the requirement that insurers notify existing Medicare
				  supplement policy or certificate holders of changes in Medicare benefits
				  resulting from the Medicare Catastrophic Coverage Act of 1988 and corresponding
				  changes in Medicare supplement insurance benefits by December 1, 1989. The
				  mailing of such notices would have been confusing and potentially misleading.
				  At the close of the first session of the 101st Congress, Congress repealed
				  provisions regarding Medicare benefits from the Medicare Catastrophic Coverage
				  Act of 1988. The Superintendent of Insurance has promulgated the Thirteenth
				  Amendment to Regulation No. 62 to establish new minimum standards for Medicare
				  supplement insurance; to assure the orderly implementation and adjustment of
				  Medicare supplement insurance benefits and premiums due to changes in the
				  Federal Medicare program; to provide for the reasonable standardization of the
				  coverage, terms and benefits of Medicare supplement insurance policies; to
				  facilitate public understanding of such policies; to eliminate policy
				  provisions which may duplicate Medicare benefits; to provide notice to former
				  insureds of an offer to reinstitute coverage; and to provide full disclosure of
				  policy benefits and benefit changes.
(n) Inasmuch as a policy of group accident,
				  group health or group accident and health insurance may provide for the
				  readjustment of the rate of premium based upon the experience thereunder,
				  procedures and requirements for filing have been incorporated in this Part to
				  assure that any such readjustment will not be unreasonable, inequitable or
				  unfair, taking size, credibility and other relevant factors into consideration.
				  Such procedures and requirements will promote an efficient and fair marketplace
				  by curbing abuses associated with deceptively low new business rates and
				  excessive or inequitable renewal rates. Such practices which violate
				  subsections (g), (h) and (j) of section 4235 may jeopardize solvency, reduce
				  availability and, in general, destabilize the market. Furthermore, basing
				  renewal rates on experience which is not statistically reliable may result in
				  inequitable treatment and make insurance protection unaffordable at a time when
				  it is most needed.
(o) As a result
				  of the changes in the benefits provided under the Federal Medicare program that
				  were made pursuant to the Medicare Catastrophic Coverage Act of 1988 and the
				  Medicare Catastrophic Coverage Repeal Act of 1989, the Superintendent of
				  Insurance promulgated new minimum standards for Medicare supplement insurance
				  in the Eighth, Ninth, and Thirteenth Amendments to Regulation No. 62. In
				  accordance with the Omnibus Budget Reconciliation Act of 1990, the
				  Superintendent of Insurance has promulgated the Seventeenth Amendment to
				  Regulation No. 62 to establish revised minimum standards for Medicare
				  supplement insurance policies or certificates delivered or issued for delivery
				  on or after May 1, 1992. Such revised minimum standards are intended to provide
				  for the reasonable standardization of coverage and simplification of terms and
				  benefits of Medicare supplement insurance policies; to facilitate public
				  understanding and comparison of such policies; to eliminate provisions
				  contained in such policies which may be misleading or confusing in connection
				  with the purchase of such policies or with the settlement of claims; and to
				  provide for full disclosure in the sale of accident and health insurance
				  coverages to persons eligible for Medicare.
(p)
(1)
				  Subject to certain limited exceptions, Insurance Law section
				  3217 and regulations promulgated thereunder
				  (section
				  52.16(c) 
				  of this Part) have long prohibited health insurance policies from limiting or
				  excluding coverage based on type of illness, accident, treatment or medical
				  condition. None of the exceptions apply to medically necessary abortions. As a
				  result, insurance policies that provide hospital, surgical, or medical expense
				  coverage are required to include coverage for abortions that are medically
				  necessary.
(2) Section
				  52.16(o) 
				  of this Part makes explicit that group and blanket insurance policies that
				  provide hospital, surgical, or medical expense coverage delivered or issued for
				  delivery in this State shall not exclude coverage for medically necessary
				  abortions. Section
				  52.16(o) 
				  of this Part also provides for an optional, limited exemption for religious
				  employers as provided in that section while ensuring that coverage is
				  maintained for any insured seeking a medically necessary
				  abortion.