2013 New York Consolidated Laws
ISC - Insurance
Article 11 - (1101 - 1125) LICENSING OF INSURERS
1125 - Freelancers health plan demonstration program.

 
    * §  1125.  Freelancers  health  plan  demonstration  program. (a) For
  purposes of this section:
    (1) "Freelancers association" means an entity that: (A) is exempt from
  federal taxation under section  501(c)(3)  or  (c)(4)  of  the  Internal
  Revenue Code; and (B) prior to January first, two thousand thirteen, has
  been  issued  one  or more health insurance policies by an insurer under
  section one thousand one hundred twenty-three of this article.
    (2) "Freelancers health plan" or "plan" means a plan maintained  by  a
  freelancers  association for the purpose of providing medical, surgical,
  or hospital services to independent  workers  who  are  members  of  the
  freelancers  association  and  a  member's  spouse,  children  and other
  persons chiefly dependent upon the member for support and maintenance.
    (3)  "Independent  worker"  means  an  individual  who:  (A)   is   an
  independent  contractor;  (B) is self-employed; (C) works part-time; (D)
  obtains temporary  work  through  an  employment  agency;  (E)  performs
  temporary  work  for  two  or  more  employers  simultaneously; (F) is a
  domestic child care worker; or (G) is hired  to  work  full-time  for  a
  single  employer  for  a  period  not  to exceed eighteen months if such
  employer does not offer group health insurance to employees employed  on
  a  temporary  basis. An individual is not an independent worker if he or
  she is employed full-time by a single employer, with the exception of an
  individual who meets the requirements of subparagraph (D), (F) or (G) of
  this paragraph.
    (4) "Member contract" means  evidence  of  coverage  furnished  to  an
  independent  worker  who  is  a member of a freelancers association that
  sets forth all benefits and  terms  and  conditions  with  regard  to  a
  freelancers health plan.
    (5)  "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.
    (b) A  freelancers  association  shall  not  establish,  maintain,  or
  otherwise   participate   in   a  freelancers  health  plan  unless  the
  freelancers association obtains and maintains  a  demonstration  program
  waiver  from  the  superintendent  pursuant  to  the  provisions of this
  section.
    (c) Except as  otherwise  provided  in  this  section,  a  freelancers
  association operating a freelancers health plan shall:
    (1) with the exception of the enrollment provisions as provided for in
  section  four  thousand  three  hundred  seventeen  of  this chapter and
  stabilization of health insurance markets and premium rates as  provided
  for  in section three thousand two hundred thirty-three of this chapter,
  be subject to the same provisions  and  requirements  of  a  corporation
  organized under article forty-three of this chapter; 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, then the
  superintendent may direct the plan to take corrective action in addition
  to the requirements of section four thousand three hundred eight of this
  chapter; and

    (3) include in its member contracts that the member contract will  not
  be effective after December thirty-first, two thousand fourteen; and
    (4)   pay   all   claims   under  its  member  contracts  by  December
  thirty-first, two thousand fifteen.
    (d)  A  freelancers  association  shall  file  an  application  for  a
  demonstration  program  waiver  on  such  form as the superintendent may
  prescribe, and shall provide to the satisfaction of  the  superintendent
  the following:
    (1)  a  copy  of the member contract, including a table of the premium
  rates charged or proposed to be charged, that effective  January  first,
  two  thousand fourteen, contains the benefits described in paragraph one
  of subsection (b) of section four thousand three hundred twenty-eight of
  this chapter and shall offer to its members, at a minimum, a contract at
  one of the levels of coverage, as defined  in  section  1302(d)  of  the
  affordable care act, 42 USC 18022(d);
    (2)  a  report  indicating  the benefit provisions, premium rates, and
  incurred medical losses associated with  the  freelancers  association's
  members   under   the   insurance   policies  insuring  the  freelancers
  association's members pursuant  to  section  one  thousand  one  hundred
  twenty-three  of  this  article for the three years prior to the date of
  the application;
    (3)  the  most  recent   certified   independently-audited   financial
  statement for the freelancers association;
    (4)  a  report  prepared  by  a  qualified  actuary  that supports the
  proposed premiums for the plan;
    (5) a copy of all agreements between the freelancers  association  and
  any plan administrator, with regard to the freelancers 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
  members of the plan;
    (7) a narrative description of:
    (A) the accounting methodology that the freelancers  association  will
  utilize,   which  shall  be  in  accordance  with  statutory  accounting
  practices and procedures as prescribed by applicable provisions of  this
  chapter and regulations promulgated thereunder as would be applicable to
  a corporation organized under article forty-three of this chapter;
    (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  freelancers  association  will receive in
  connection with the plan;
    (8) a 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, to the extent permissible under
  federal   law,   if  a  freelancers  association  submits  a  materially
  satisfactory and complete application within sixty days of the effective
  date of this section, then the superintendent may issue the  freelancers
  association  a  demonstration  program  waiver  that  is effective on or
  before January first, two thousand fourteen. Every demonstration program
  waiver shall contain the name of the entity and its home office address.
  The superintendent shall refuse to grant a demonstration program  waiver
  to an applicant that fails to meet the requirements of this section. The
  superintendent  may refuse to issue any demonstration program waiver 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 demonstration program waiver, a
  freelancers association 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 freelancers health  plan  or,  in  order  to
  provide  such administrative services, in whole or part, have contracted
  with a person or entity to serve as a plan administrator, determined  by
  the   freelancers   association  to  be  qualified  based  upon  written
  documentation furnished to the freelancers  association,  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 members with a member contract;
    (6)  maintain  its  functions,  activities and services undertaken and
  performed pursuant to a demonstration program waiver separate  from  any
  other  function, activity or service through the maintenance of separate
  records, reports and accounts  for  each  such  freelancers  association
  function, activity, or service. The records, reports and accounts of the
  freelancers association shall be maintained separately from those of any
  other  person or freelancers association that is a parent, subsidiary or
  affiliate of the freelancers association;
    (7) file all plan  documents  and  any  amendments  thereto  with  the
  superintendent  and  receive the superintendent's approval in accordance
  with this section; and
    (8)  provide  prominent,  separately  stated  notice   to   all   plan
  participants  that  their contracts will not be effective after December
  thirty-first,  two  thousand  fourteen,  and  that  their  policies  are
  non-renewable  for any period beyond December thirty-first, two thousand
  fourteen.
    (g) A  freelancers  association  that  has  received  a  demonstration
  program   waiver   shall   file   with   the   superintendent,  for  the
  superintendent's prior approval, any amendments to the member  contract,
  freelancers health plan, or premium rates charged for the plan.
    (h)(1)  A  freelancers  association  shall  establish  and  maintain a
  reserve to be designated as the statutory reserve  fund,  in  an  amount
  equal to twelve and one-half per centum of the net premium income of the
  plan,  in  addition  to  reserves consisting of 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;  and (B) a reserve for unearned premium equivalents,
  computed pro-rata on the basis of the unexpired portion  of  the  policy
  period.

    (2)  If  at  any  time  the  reserve  funds required to be established
  pursuant to this section fall below the required minimum  amounts,  then
  the  freelancers association shall immediately notify the superintendent
  of  such  impairment.  The  freelancers  association  shall   cure   the
  impairment within five business days.
    (3)  The  assets  constituting the freelancers health plan's statutory
  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 statutory reserve fund.
    (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 freelancers association. The accounting for
  the plan's statutory 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  statutory  reserve  fund;  (D)  the order,
  purpose, date and amount of each  payment  from  the  statutory  reserve
  fund;  and (E) the assets of the statutory reserve fund, indicating cash
  balance and schedule of investments.
    (5) The requirements for funding  of  the  plan's  reserves  shall  be
  calculated  using  statutory  accounting  practices and procedures. 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  customary insurance 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) A freelancers association 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  freelancers  association's principal officers, with direct
  knowledge of the operations of the freelancers health plan, showing  the
  financial  condition  and  affairs  of  the  plan during the most recent
  fiscal  year,  in  accordance  with  law  and  statutory  practices  and
  procedures as adopted by the superintendent, in a form prescribed by the
  superintendent;
    (B)  the identity of the qualified actuary utilized by the freelancers
  association or plan and the amount paid to the qualified actuary by  the
  freelancers association 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  freelancers  association  to  administer the freelancers 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)  A  freelancers  association  shall  file  with the superintendent
  within one hundred twenty days of the close of  its  freelancers  health
  plan's  fiscal  year  the  most  recent certified, independently audited
  financial statement for the freelancers association. 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
  freelancers health plan operations and  a  description  as  to  how  the
  freelancers  association 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 statutory reserve fund
  to demonstrate compliance with paragraph one of subsection (h)  of  this
  section.
    (3)   A   freelancers   association  shall  file  a  report  with  the
  superintendent each quarter, within forty-five days after quarter close,
  describing the  plan's  current  financial  status  and  providing  such
  information as the superintendent may prescribe.
    (4)  A  freelancers  association  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 notice an 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 sections 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 freelancers association with regard
  to a freelancers health plan issued by the freelancers  association,  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  the  freelancers  association,  with  regard  to a
  freelancers health plan established or  maintained  by  the  freelancers
  association,  shall be borne and paid for by the freelancers association
  so examined. The expenses of examination shall include reimbursement for
  the  compensation  paid  for  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 demonstration
  program waiver issued to a freelancers association if the superintendent
  finds, after notice and hearing, that the  freelancers  association  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 a demonstration program waiver;
    (B) failure to maintain the reserves required  by  subsection  (h)  of
  this section; or
    (C)  a  determination  by  the  superintendent  that  the  freelancers
  association 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 freelancers health plan or to perform any other
  legal obligation relating to such an examination when  required  by  the
  superintendent.

    (2)  Any  demonstration program waiver suspended or revoked under this
  subsection  shall  be  surrendered  to  the  superintendent,   and   the
  freelancers  association  shall  notify  all members 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   freelancers
  association  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
  demonstration  program  waiver  with regard to a freelancers health plan
  shall be public.
    (l) In any case in which a  freelancers  association  determines  that
  there  is  a  reason  to  believe  that the freelancers health plan will
  terminate,   the   freelancers   association   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  freelancers  association
  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) No part of any funds  of  the  freelancers  association,  as  they
  pertain  to  the freelancers health plan, shall be subject to the claims
  of general creditors of  the  freelancers  association  until  all  plan
  benefits  and  other  plan  obligations  have been satisfied. Until such
  time, the freelancers association 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
  freelancers association shall make the deposit within thirty days of the
  superintendent's determination.
    (n) A freelancers association that receives  a  demonstration  program
  waiver   under  this  section  shall  submit  periodic  reports  to  the
  superintendent sufficient to enable the superintendent to  evaluate  the
  effectiveness of the demonstration program. Such reports shall include a
  comparison  of  the cost of benefits obtained under the program to other
  available insurance options and any other information  required  by  the
  superintendent.
    (o)  A  freelancers  association shall not issue a stop-loss insurance
  policy.
    (p)  A  freelancers  health  plan  shall  provide  benefits  only   to
  independent  workers  who  are  members  of  the freelancers association
  sponsoring the plan and such members' spouses, children  and  all  other
  persons  chiefly dependent upon the members for support and maintenance;
  provided, however, a freelancers health plan shall not  establish  rules
  of  eligibility,  including  continued eligibility, of any individual or
  dependent of the individual based on any of the following factors:
    (1) health status;
    (2) medical condition;
    (3) claims experience;
    (4) receipt of health care;
    (5) medical history;
    (6) genetic information;
    (7) evidence of insurability, including conditions arising out of acts
  of domestic violence; or

    (8) disability.
    (q)   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 members of the freelancers association and  the
  member's  spouse,  children and other persons chiefly dependent upon the
  members for support and maintenance.
    (r) Except as otherwise provided  in  this  section,  any  freelancers
  association that violates this section shall be subject to the penalties
  set forth in section one hundred nine of this chapter.
    (s)  Notwithstanding  anything  to  the  contrary in this section, any
  activities that may or must be carried out by a freelancers  association
  under  this  section  may  be  carried  out on behalf of the freelancers
  association  by  another  entity  wholly  owned  or  controlled  by  the
  freelancers  association,  provided  that  any activities carried out on
  behalf of the freelancers association by another entity wholly owned  or
  controlled  by  the  freelancers  association  shall  be  subject to all
  provisions of this section.
    * NB Repealed December 31, 2014