2010 New York Code
ISC - Insurance
Article 32 - (3201 - 3239) 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) No individual health insurance
  policy and no group health insurance policy  covering  between  two  and
  fifty  employees  or  members  of  the  group  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  as permitted by this article. 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, 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. 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 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 as 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. For the
  purposes of this section, "community rated" means a  rating  methodology
  in  which  the  premium  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 or occupation.
    (b) Nothing herein shall prohibit the use of premium  rate  structures
  to  establish  different  premium  rates  for  individuals as opposed to
  family units or separate community rates for individuals as  opposed  to
  small  groups.  If  an  insurer  is  required  to  issue  a  contract to
  individual proprietors pursuant to subsection (i) of this section,  such
  policy shall be subject to subsection (a) of this section.
    (c)  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.
    (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 insurance department 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  insurance  department  or
  insurer  to receive additional information or to submit written comments
  to the insurance department 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 insurance department's 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 June  thirtieth  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) 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 fifty or fewer employees or  members  exclusive
  of spouses and dependents.
    (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,
  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.
    (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, individual
  proprietors shall be classified in their own community rating  category,
  provided  however,  up  to  and  including  December  thirty-first,  two
  thousand eleven, 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.
    (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