Section 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)  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.
    (e)  (1)  An  insurer  desiring to increase or decrease premiums after
  April first, nineteen hundred ninety-three for any policy  form  subject
  to  this  section  shall  submit  a  rate  filing  or application to the
  superintendent.  The superintendent shall determine whether  the  filing
  or  application  shall become effective as filed, shall become effective
  as modified, or shall be disapproved.
    (2) (A) Beginning October first, nineteen hundred ninety-four,  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  seventy-five  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.
    * (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 seventy-five percent of
  the aggregate  premiums  collected  for  the  policy  form  during  that
  calendar  year.  Insurers shall annually report, no later than May first
  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 seventy-five
  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  seventy-five  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 which was in effect as
  of December thirty-first of the applicable year and remains in effect as
  of the date the dividend or credit is issued. 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.

    * NB Effective until January 1, 2010
    * (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 seventy-five percent of
  the aggregate  premiums  collected  for  the  policy  form  during  that
  calendar  year.  Insurers shall annually report, no later than May first
  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 seventy-five
  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  seventy-five  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.
    * NB Effective January 1, 2010
    (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