Section 4326. Standardized health insurance contracts for qualifying small employers and individuals

(a) A program is hereby established  for  the  purpose  of  making standardized health insurance contracts available to
  qualifying small employers and qualifying individuals as defined in this
  section. Such program is designed to encourage small employers to  offer
  health  insurance  coverage to their employees and to also make coverage
  available to uninsured employees whose employers do  not  provide  group
  health insurance.
    (b)  Participation  in  the  program  established  by this section and
  section four thousand three hundred  twenty-seven  of  this  article  is
  limited  to  corporations  or  insurers organized or licensed under this
  article or article forty-two of  this  chapter  and  health  maintenance
  organizations issued a certificate of authority under article forty-four
  of  the  public health law or licensed under this article. Participation
  by all health maintenance organizations is mandatory, provided, however,
  that  such  requirements  shall  not  apply  to  a  health   maintenance
  organization  exclusively serving individuals enrolled pursuant to title
  eleven of article five of the social services  law,  title  eleven-D  of
  article  five  of  the  social  services  law,  title  one-A  of article
  twenty-five of the public health law or title eighteen  of  the  federal
  Social Security Act, and, further provided, that such health maintenance
  organization   shall  not  discontinue  a  contract  for  an  individual
  receiving comprehensive-type coverage in effect prior to January  first,
  two  thousand  four who is ineligible to purchase policies offered after
  such date pursuant to  this  section  or  section  four  thousand  three
  hundred  twenty-two  of  this  article due to the provision of 42 U.S.C.
  1395ss in effect prior to January first, two thousand four. On and after
  January first, two thousand one, all  health  maintenance  organizations
  shall  offer  qualifying group health insurance contracts and qualifying
  individual health insurance contracts as defined in  this  section.  For
  the  purposes  of  this  section and section four thousand three hundred
  twenty-seven  of  this  article,  article  forty-three  corporations  or
  article  forty-two  insurers which voluntarily participate in compliance
  with  the  requirements  of  this  program   shall   be   eligible   for
  reimbursement  from the stop loss funds created pursuant to section four
  thousand three hundred twenty-seven of this article under the same terms
  and conditions as health maintenance organizations.
    (c) The following definitions shall be  applicable  to  the  insurance
  contracts offered under the program established by this section:
    (1) A qualifying small employer is an employer that is either:
    (A) An individual proprietor who is the only employee of the business:
    (i)  without  health  insurance  which provides benefits on an expense
  reimbursed or prepaid basis in effect during  the  twelve  month  period
  prior  to  application  for a qualifying group health insurance contract
  under the program established by this section; and
    (ii) resides in a household having a net household income at or  below
  two  hundred  eight  percent  of  the non-farm federal poverty level (as
  defined and updated by  the  federal  department  of  health  and  human
  services) or the gross equivalent of such net income;
    (iii)  except  that  the  requirements  set  forth in item (i) of this
  subparagraph shall not be applicable where an individual proprietor  had
  health  insurance  coverage  during  the previous twelve months and such
  coverage terminated due to one of the reasons set  forth  in  items  (i)
  through  (viii) of subparagraph (C) of paragraph three of subsection (c)
  of this section; or
    (B) An employer with:
    (i) not more than fifty eligible employees;

    (ii) no group health insurance which provides benefits on  an  expense
  reimbursed  or  prepaid  basis  covering  employees in effect during the
  twelve month period prior to application for a qualifying  group  health
  insurance contract under the program established by this section; and
    (iii)  at  least  thirty  percent  of its eligible employees receiving
  annual wages from the employer at a level equal to or less  than  thirty
  thousand  dollars.  The  thirty thousand dollar figure shall be adjusted
  periodically pursuant to subparagraph (F) of this paragraph.
    (C) The requirements set forth in item (i) of subparagraph (A) of this
  paragraph and in item (ii) of subparagraph (B) of this  paragraph  shall
  not  be  applicable  where  an  individual  proprietor  or  employer  is
  transferring from a health insurance contract issued pursuant to the New
  York  state  small  business  health   insurance   partnership   program
  established  by section nine hundred twenty-two of the public health law
  or from health care coverage issued pursuant to a regional pilot project
  for the uninsured  established  by  section  one  thousand  one  hundred
  eighteen of this chapter.
    (D)  The twelve month period set forth in item (i) of subparagraph (A)
  of this paragraph and in item (ii) of subparagraph (B) of this paragraph
  may be adjusted by the superintendent from  twelve  months  to  eighteen
  months  if he determines that the twelve month period is insufficient to
  prevent inappropriate substitution of other health  insurance  contracts
  for qualifying group health insurance contracts.
    (E)  An  individual  proprietor  or  employer  shall  cease  to  be  a
  qualifying  small  employer  if  any  health  insurance  which  provides
  benefits  on  an  expense  reimbursed  or  prepaid  basis  covering  the
  individual proprietor or an employer's employees, other than  qualifying
  group  health insurance purchased pursuant to this section, is purchased
  or otherwise takes effect subsequent to  purchase  of  qualifying  group
  health insurance under the program established by this section.
    (F)  The  wage  levels  utilized in subparagraph (B) of this paragraph
  shall  be  adjusted  annually,  beginning  in  two  thousand  two.   The
  adjustment shall take effect on July first of each year. For July first,
  two  thousand  two,  the  adjustment shall be a percentage of the annual
  wage figure  specified  in  subparagraph  (B)  of  this  paragraph.  For
  subsequent  years,  the  adjustment  shall be a percentage of the annual
  wage figure which took effect on July  first  of  the  prior  year.  The
  percentage  adjustment shall be the same percentage by which the current
  year's non-farm federal poverty level, as defined  and  updated  by  the
  federal  department  of  health and human services, for a family unit of
  four persons for the forty-eight contiguous states and Washington, D.C.,
  changed from the same level established for the prior year.
    (2) A qualifying group health insurance contract is a  group  contract
  purchased from a health maintenance organization, corporation or insurer
  by  a qualifying small employer which provides the benefits set forth in
  subsection (d) of this section. The contract must insure not  less  than
  fifty percent of the employees eligible for coverage.
    (3)(A) A qualifying individual is an employed person:
    (i)  who  does not have and has not had health insurance with benefits
  on an expense reimbursed or prepaid basis during the twelve month period
  prior to the individual's application for  health  insurance  under  the
  program established by this section;
    (ii)  whose  employer  does not provide group health insurance and has
  not  provided  group  health  insurance  with  benefits  on  an  expense
  reimbursed  or  prepaid  basis  covering  employees in effect during the
  twelve month period prior to the  individual's  application  for  health
  insurance under the program established by this section;

    (iii) resides in a household having a net household income at or below
  two  hundred  eight  percent  of  the non-farm federal poverty level (as
  defined and updated by  the  federal  department  of  health  and  human
  services) or the gross equivalent of such net income; and
    (iv) is ineligible for Medicare.
    (B)  The  requirements set forth in items (i) and (ii) of subparagraph
  (A) of this paragraph shall not be applicable  where  an  individual  is
  transferring  from  a  health  insurance contract issued pursuant to the
  voucher insurance  program  established  by  section  one  thousand  one
  hundred  twenty-one  of this chapter, a health insurance contract issued
  pursuant  to  the  New  York  state  small  business  health   insurance
  partnership  program  established  by section nine hundred twenty-two of
  the public health law or health  care  coverage  issued  pursuant  to  a
  regional  pilot  project  for  the  uninsured established by section one
  thousand one hundred eighteen of this chapter.
    (C) The requirements set forth in items (i) and (ii)  of  subparagraph
  (A)  of  this  paragraph shall not be applicable where an individual had
  health insurance coverage during the previous  twelve  months  and  such
  coverage terminated due to:
    (i) loss of employment due to factors other than voluntary separation;
    (ii) death of a family member which results in termination of coverage
  under a health insurance contract under which the individual is covered;
    (iii)  change  to  a  new  employer that does not provide group health
  insurance with benefits on an expense reimbursed or prepaid basis;
    (iv) change of residence so that no  employer-based  health  insurance
  with benefits on an expense reimbursed or prepaid basis is available;
    (v) discontinuation of a group health insurance contract with benefits
  on  an  expense  reimbursed  or  prepaid  basis  covering the qualifying
  individual as an employee or dependent;
    (vi)  expiration  of  the  coverage   periods   established   by   the
  continuation  provisions of the Employee Retirement Income Security Act,
  29 U.S.C.  section 1161 et seq. and the Public Health  Service  Act,  42
  U.S.C.   section 300bb-1 et seq. established by the Consolidated Omnibus
  Budget Reconciliation Act of  1985,  as  amended,  or  the  continuation
  provisions  of  subsection  (m)  of  section  three thousand two hundred
  twenty-one, subsection (k) of section four thousand three  hundred  four
  and  subsection  (e) of section four thousand three hundred five of this
  chapter;
    (vii)  legal  separation,  divorce  or  annulment  which  results   in
  termination  of  coverage  under a health insurance contract under which
  the individual is covered; or
    (viii) loss of eligibility under a group health plan.
    (D) The twelve month period  set  forth  in  items  (i)  and  (ii)  of
  subparagraph (A) of this paragraph may be adjusted by the superintendent
  from  twelve  months to eighteen months if he determines that the twelve
  month period is insufficient to prevent  inappropriate  substitution  of
  other  health  insurance  contracts  for  qualifying  individual  health
  insurance contracts.
    (4) A qualifying individual health insurance contract is an individual
  contract issued directly to a qualifying individual and  which  provides
  the  benefits set forth in subsection (d) of this section. At the option
  of the qualifying individual, such contract  may  include  coverage  for
  dependents of the qualifying individual.
    (d)   The   contracts  issued  pursuant  to  this  section  by  health
  maintenance organizations, corporations or insurers and approved by  the
  superintendent shall only provide in-plan benefits, except for emergency
  care  or  where  services  are  not  available  through a plan provider.
  Covered services shall include only the following:

    (1) inpatient hospital services consisting of daily  room  and  board,
  general  nursing care, special diets and miscellaneous hospital services
  and supplies;
    (2)   outpatient   hospital  services  consisting  of  diagnostic  and
  treatment services;
    (3)  physician  services  consisting  of  diagnostic   and   treatment
  services, consultant and referral services, surgical services (including
  breast  reconstruction surgery after a mastectomy), anesthesia services,
  second surgical opinion, and a second opinion for cancer treatment;
    (4) outpatient surgical facility charges related to a covered surgical
  procedure;
    (5) preadmission testing;
    (6) maternity care;
    (7)  adult  preventive  health  services  consisting  of   mammography
  screening;  cervical  cytology screening; periodic physical examinations
  no more than once every three years; and adult immunizations;
    (8) preventive and primary health care services for dependent children
  including routine well-child visits and necessary immunizations;
    (9)  equipment,  supplies  and  self-management  education   for   the
  treatment of diabetes;
    (10) diagnostic x-ray and laboratory services;
    (11) emergency services;
    (12)   therapeutic   services   consisting   of  radiologic  services,
  chemotherapy and hemodialysis;
    (13) blood and blood products furnished in connection with surgery  or
  inpatient hospital services; and
    (14)  prescription  drugs  obtained  at  a  participating pharmacy. In
  addition to providing  coverage  at  a  participating  pharmacy,  health
  maintenance  organizations  may  utilize  a mail order prescription drug
  program. Health maintenance organizations may provide prescription drugs
  pursuant to a drug formulary; however, health maintenance  organizations
  must  implement  an  appeals  process  so  that the use of non-formulary
  prescription drugs may be requested by a physician.
    (d-1)  Covered  services  shall  not  include  drugs,  procedures  and
  supplies  for the treatment of erectile dysfunction when provided to, or
  prescribed for use by, a person who is required to  register  as  a  sex
  offender pursuant to article six-C of the correction law, provided that:
  (1) any denial of coverage pursuant to this subsection shall provide the
  enrollee  with  the means of obtaining additional information concerning
  both the denial and the means of challenging such denial; (2) all drugs,
  procedures and supplies for the treatment of erectile dysfunction may be
  subject to prior  authorization  by  corporations,  insurers  or  health
  maintenance   organizations   for  the  purposes  of  implementing  this
  subsection; and (3) the superintendent shall promulgate  regulations  to
  implement  the  denial  of  coverage  pursuant to this subsection giving
  health maintenance organizations, corporations  and  insurers  at  least
  sixty  days following promulgation of the regulations to implement their
  denial procedures pursuant to this subsection.
    (d-2) No person or entity authorized to provide  coverage  under  this
  section  shall be subject to any civil or criminal liability for damages
  for any decision or action pursuant to subsection (d-1) of this section,
  made in the ordinary course of business if  that  authorized  person  or
  entity  acted  reasonably  and  in  good  faith  with  respect  to  such
  information.
    (d-3) Notwithstanding any other provision of law, if the  commissioner
  of  health  makes  a  finding  pursuant  to  subdivision twenty-three of
  section two hundred six of the public health law, the superintendent  is
  authorized  to  remove  a  drug,  procedure  or supply from the services

  covered by the standardized health  insurance  contract  established  by
  this  section  for  those  persons required to register as sex offenders
  pursuant to article six-C of the correction law.
    (e) The benefits provided in the contracts described in subsection (d)
  of  this  section  shall  be  subject  to  the following deductibles and
  copayments:
    (1) in-patient hospital services shall  have  a  five  hundred  dollar
  copayment for each continuous hospital confinement;
    (2) surgical services shall be subject to a copayment of the lesser of
  twenty  percent  of the cost of such services or two hundred dollars per
  occurrence;
    (3) outpatient  surgical  facility  charges  shall  be  subject  to  a
  facility copayment charge of seventy-five dollars per occurrence;
    (4)  emergency services shall have a fifty dollar copayment which must
  be waived if hospital admission results from the emergency room visit;
    (5) prescription drugs shall have a one hundred dollar  calendar  year
  deductible  per  individual.  After  the  deductible  is satisfied, each
  thirty-four day supply of a prescription  drug  will  be  subject  to  a
  copayment. The copayment will be ten dollars if the drug is generic. The
  copayment  for  a  brand  name  drug  will  be  twenty  dollars plus the
  difference in cost between  the  brand  name  drug  and  the  equivalent
  generic  drug. If a mail order drug program is utilized, a twenty dollar
  copayment  shall  be  imposed  on  a  ninety  day  supply   of   generic
  prescription drugs. A forty dollar copayment plus the difference in cost
  between  the  brand  name  drug and the equivalent generic drug shall be
  imposed on a ninety day supply of brand name prescription drugs.  In  no
  event shall the copayment exceed the cost of the prescribed drug;
    (6)  the  maximum  coverage  for  prescription  drugs  shall  be three
  thousand dollars per individual in a calendar year; and
    (7) all other services shall have a twenty dollar copayment  with  the
  exception of prenatal care which shall have a ten dollar copayment.
    (f)  Except  as included in the list of covered services in subsection
  (d) of this section, the mandated and make-available benefits set  forth
  in  sections  three  thousand  two  hundred  sixteen, three thousand two
  hundred twenty-one of this chapter and four thousand three hundred three
  of this article shall not be applicable to the contracts issued pursuant
  to this section. Mandated benefits included in such contracts  shall  be
  subject to the deductibles and copayments set forth in subsection (e) of
  this section.
    (g)  The  superintendent shall be authorized to modify, by regulation,
  the copayment and deductible amounts described in this  section  if  the
  superintendent  determines  such  amendments are necessary to facilitate
  implementation of this section. On or after January first, two  thousand
  two, the superintendent shall be authorized to establish, by regulation,
  one or more additional standardized health insurance benefit packages if
  the superintendent determines additional benefit packages with different
  levels of benefits are necessary to meet the needs of the public.
    (h)  A  health  maintenance  organization, corporation or insurer must
  offer  the  benefit  package  without  change  or  additional  benefits.
  Qualifying  small  employers  shall  be  issued the benefit package in a
  qualifying group health insurance contract. Qualifying individuals shall
  be  issued  the  benefit  package  in  a  qualifying  individual  health
  insurance contract.
    (i)  A  health  maintenance organization, corporation or insurer shall
  obtain from the employer or individual written certification at the time
  of initial application and annually thereafter ninety days prior to  the
  contract  renewal  date  that  such  employer  or  individual  meets the
  requirements of a qualifying small employer or a  qualifying  individual

  pursuant to this section. A health maintenance organization, corporation
  or  insurer  may  require the submission of appropriate documentation in
  support of the certification.
    (j)  Applications  for qualifying group health insurance contracts and
  qualifying individual health insurance contracts must be  accepted  from
  any qualifying individual and any qualifying small employer at all times
  throughout  the  year.  The  superintendent,  by regulation, may require
  health maintenance  organizations,  corporations  or  insurers  to  give
  preference  to  qualifying small employers whose eligible employees have
  the lowest average salaries.
    (k) All coverage under a qualifying group health insurance contract or
  a qualifying individual health insurance contract must be subject  to  a
  pre-existing  condition  limitation  provision  as set forth in sections
  three thousand two hundred thirty-two of this chapter and four  thousand
  three   hundred  eighteen  of  this  article,  including  the  crediting
  requirements thereunder. The underwriting  of  such  contracts  may  not
  involve more than the imposition of a pre-existing condition limitation.
    (l)  A  qualifying small employer shall elect whether to make coverage
  under the  qualifying  group  health  insurance  contract  available  to
  dependents  of  employees.  Any employee or dependent who is enrolled in
  Medicare is ineligible for coverage, unless  required  by  federal  law.
  Dependents  of  an employee who is enrolled in Medicare will be eligible
  for dependent coverage provided the dependent is not  also  enrolled  in
  Medicare.
    (m) A qualifying small employer must pay at least fifty percent of the
  premium  for employees covered under a qualifying group health insurance
  contract and must offer coverage to all employees receiving annual wages
  at a level of thirty thousand dollars or less, and  at  least  one  such
  employee  shall  accept  such  coverage. The thirty thousand dollar wage
  level shall be adjusted periodically in accordance with subparagraph (F)
  of paragraph one of subsection (c) of this section. The employer premium
  contribution must be the same percentage for all covered employees.
    (n) Premium rate calculations for qualifying  group  health  insurance
  contracts  and qualifying individual health insurance contracts shall be
  subject to the following:
    (1) coverage must be  community  rated  and  include  rate  tiers  for
  individuals,  two adult families and at least one other family tier. The
  rate differences must  be  based  upon  the  cost  differences  for  the
  different family units and the rate tiers must be uniformly applied. The
  rate   tier   structure  used  by  a  health  maintenance  organization,
  corporation or insurer for the  contracts  issued  to  qualifying  small
  employers and to qualifying individuals must be the same;
    (2)  if  geographic  rating  areas are utilized, such geographic areas
  must be reasonable and in a given case may include a single county.  The
  geographic  areas  utilized must be the same for the contracts issued to
  qualifying  small  employers  and   to   qualifying   individuals.   The
  superintendent   shall   not  require  the  inclusion  of  any  specific
  geographic region within the proposed community rated region selected by
  the health maintenance organization, corporation or insurer so  long  as
  the  health  maintenance organization, corporation or insurer's proposed
  regions do not contain configurations designed  to  avoid  or  segregate
  particular  areas  within  a  county  covered  by the health maintenance
  organization, corporation or insurer's community rates.
    (3) claims experience  under  contracts  issued  to  qualifying  small
  employers  and to qualifying individuals must be pooled for rate setting
  purposes. The  premium  rates  for  qualifying  group  health  insurance
  contracts  and  qualifying individual health insurance contracts must be
  the same.

    (o) A health maintenance organization, corporation  or  insurer  shall
  submit reports to the superintendent in such form and at times as may be
  reasonably  required  in order to evaluate the operations and results of
  the standardized health insurance program established by this section.
    (p)  Notwithstanding  any  other provision of law, all individuals and
  small businesses that are  participating  in  or  covered  by  insurance
  contracts  or  policies  issued  pursuant  to  the  New York state small
  business health insurance partnership  program  established  by  section
  nine  hundred twenty-two of the public health law, the voucher insurance
  program established by section one thousand one  hundred  twenty-one  of
  this  chapter,  or  uninsured  pilot  programs  established  pursuant to
  chapter seven hundred three of the laws of nineteen hundred eighty-eight
  shall be eligible for participation in the standardized health insurance
  contracts  established  by  this  section,  regardless  of  any  of  the
  eligibility  requirements established pursuant to subsection (c) of this
  section.