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. 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. Individual proprietors and groups of two must be classified in the individual or small group rating category by the insurer. (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.

or

(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, 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 cent 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

per

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.

(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 ter 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 the premium increase or decrease requested by the insurer is unreasonable.

af

that

(8) This section shall also apply to policies issued to a group defined in subsection (c) of section four thousand two hundred thirtyfive, 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 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 nember small employers and member small groups without underwriting by

any

as

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 EXPLANATION-Matter in italics is new; matter in brackets [] is old law

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.

§ 5. The insurance law is amended by adding a new section 3232 to read as follows:

§ 3232. Pre-existing condition provisions. Every individual health insurance policy and every small group health insurance policy issued or issued for delivery in this state which includes a pre-existing condition provision shall contain in substance the following provision or provisions which in the opinion of the superintendent are more favorable to the individuals, members of the group and their eligible dependents: (a) In determining whether a pre-existing condition provision applies to an eligible person, the small group policy or individual policy shall credit the time the person was previously covered under a previous health insurance plan or policy or employer-provided health benefit arrangement, if the previous coverage was continuous to a date not more than sixty days prior to the effective date of the new coverage. In the case of previous health maintenance organization coverage, any waiting period prior to that previous coverage becoming effective shall also be credited pursuant to this subsection.

(b) No pre-existing condition provision shall exclude coverage for a period in excess of twelve months following the effective date of coverage for the covered person and may only relate to conditions manifesting themselves in symptoms which would cause an ordinary prudent person to seek medical advice, diagnosis, care or treatment or for which medical advice, diagnosis, care or treatment was recommended or received during the six months immediately preceding the effective date of coverage or as to a pregnancy existing on the effective date of coverage.

on

§ 6. The insurance law is amended by adding a new section 3233 to read as follows: § 3233. Stabilization of health insurance markets and premium rates. (a) Notwithstanding any provision of this chapter or any other chapter, or before October first, nineteen hundred ninety-two the superintendent shall promulgate regulations to assure an orderly implementation and ongoing operation of the open enrollment and community rating required by sections thirty-two hundred thirty-one and forty-three hundred seventeen of this chapter, including provisions designed to encourage insurers to remain in or enter the small group or individual health insurance markets. The regulations shall apply to all insurers and health maintenance organizations subject to community rating. The regulations shall be designed to promote an insurance marketplace where premiums do not unduly fluctuate, insurers and health maintenance organizations are reasonably protected against unexpected significant shifts in the number of persons insured, and other market stability features deemed appropriate by the superintendent. Such regulations shall not require any insurer or health maintenance organization subject to this section, or any subsidiary or controlled person of a holding company of such insurer or health maintenance organization, to enter, continue to conduct, or withdraw from any line of business as a condition of entering, continuing in, or withdrawing from any other line of business. (b) Prior to adopting such regulations the superintendent shall convene a technical advisory committee to provide advice and recommenda

nine

and

tions to the superintendent on issues including, but not limited to, voluntary reinsurance, pooling, risk sharing, the moderation of initial community rates as compared to prior rates, or premium stabilization methods. The technical advisory committee shall be comprised of members, one of whom shall be the superintendent or his or her designee. The superintendent or his or her designee shall chair the committee shall appoint two other members to the committee. The temporary president of the senate and the speaker of the assembly shall each appoint three members to the committee. The appointees shall be representatives of commercial health insurers, not-for-profit health insurers, health maintenance organizations and purchasers of insurance and shall be named no later than July fifteenth, nineteen hundred ninety-two. In addition, the superintendent may obtain the services of an actuary with experience relating to premium rates and market stabilization for small group health insurance.

(c) Such regulations shall include reinsurance or a pooling process involving insurer contributions to, or receipts from, a fund which shall be designed to share the risk of or equalize high cost claims, claims of high cost persons, cost variations among insurers and health maintenance organizations based upon demographic factors of the persons insured which correlate with such cost variations designed to protect insurers from disproportionate adverse risks of offering coverage to all applicants; provided that such regulations shall relate only to risk sharing among insurers and health maintenance organizations and shall not create differences in community rates charged by a single insurer because an individual's or small group's coverage has been reinsured or pooled, and neither the small employer nor the employee shall have reason to know that their coverage has been reinsured or pooled pursuant to such regulations. Such regulations may also include other mechanisms designed to share risks or prevent undue variations in insurer claim costs which are not related to expected differences in insurer costs based upon competition, innovation and efficiency of operation. The regulations may segregate any reinsurance, pooling or other process among various geographic regions of the state.

as follows:

the

§ 7. Paragraph 1 of subsection (e) of section 4304 of the insurance law as amended by chapter 306 of the laws of 1987, is amended to read (1) If any such contract is terminated in accordance with the provisions of paragraph two or three of subsection (c) hereof, and at the time of such termination the individual to whom the contract was issued has been covered continuously immediately preceding such termination for a period of more than two years under one or more contracts of the corporation, or any such contract is terminated because of a default by the remitting agent in the payment of premiums not cured within the grace period and the remitting agent has not replaced the contract with similar and continuous coverage for the same group whether insured or selfinsured, or any such contract is terminated in accordance with provisions of subparagraph (F) of paragraph four of subsection (c) hereof, or if an individual other than the contract holder is no longer covered under a "family contract" because he is no longer within the definition set forth in the contract, or a spouse is no longer covered under the contract because of divorce from the contract holder or annulment of the marriage, or any such contract is terminated because the death of the contract holder, then such individual, former spouse, or in the case of the death of the contract holder the surviving spouse or other dependents of the deceased contract holder covered under the contract, as the case may be, shall be entitled to convert, without evidence of insurability, upon application therefor and the making of the first payment thereunder within thirty-one days after the date of termination of such contract, to a contract of a type [which is then being issued by the corporation to individuals who pay the premiums for the contract directly to the corporation_and] which provides [benefits] coverage most nearly comparable to the [benefits] type of coverage under the contract from which the individual converted, which coverage shall be no less than the minimum standards for basic hospital, basic medical, or major medical as provided for in insurance department regulation; provided, however, that if the corporation does not issue such a major medical contract, then to a comprehensive or comparable type of coverage EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

of

which is most commonly being sold to group remitting agents. The effective date of the coverage provided by the converted direct payment contract shall be the date of the termination of coverage under the contract from which conversion was made.

8. Subsection (e) of section 4304 of the insurance law is amended by adding a new paragraph 4 to read as follows:

(4) In addition to the right of conversion herein, the employee or member insured under a contract for which the premiums are paid by a remitting agent of a group shall at his option, as an alternative to conversion, be entitled to have his coverage continued under the group remittance contract in accordance with the conditions and limitations contained in subsection (k) of this section, and have issued at the end of the period of continuation an individual direct payment conversion contract subject to the terms of this subsection. The effective date for the conversion contract shall be the day following the termination of insurance under the group remittance contract, or if there is a continuation of coverage, on the day following the end of the period of

continuation.

§ 9. Section 4304 of the insurance law is amended by adding a new subsection (k) to read as follows:

(k) A contract for which the premiums are paid by a remitting agent of a group issued by a hospital service, health service or medical expense indemnity corporation shall provide that if all or any portion of the insurance on an employee or member insured under the contract ceases because of termination of employment or membership in the class or classes eligible for coverage under the contract, such employee or member shall be entitled without evidence of insurability upon application to continue his or her insurance for himself or herself and his or her eligible dependents, subject to all of the group remittance contract's terms and conditions applicable to those forms of benefits and to the following conditions:

(1) Continuation shall not be available for: (A) any person who is covered, becomes covered or could be covered by title XVIII of the United States Social Security Act (Medicare) as amended or superseded; or (B) an employee, member or dependent who is covered, becomes covered or could become covered as an employee, member or dependent by any other insured or uninsured arrangement which provides hospital, surgical or medical coverage for individuals in a group which does not contain any exclusion or limitation with respect to any pre-existing condition of such employee, member or dependent, except the group insurance or group remittance contract conversion option of this section shall not be considered as such an arrangement under which an employee, member or dependent could become covered.

(2) (A) An employee or member who wishes continuation of coverage must request such continuation in writing within the sixty day period following the later of: (i) the date of such termination; or (ii) the date the employee is given notice of the right of continuation by either his employer or the group remitting agent.

(B) An employee or member who wishes continuation of coverage under subparagraph (D) of paragraph four of this subsection must give notice to the employer or group remitting agent within sixty days of the determination under title II or title XVI of the United States Social Security Act that such employee or member was disabled at the time of termination of employment or membership.

(3) An employee or member electing continuation must pay to the group remitting agent or his employer, but not more frequently than on a monthly basis in advance, the amount of the required premium payment, but not more than one hundred two percent of the group rate for the benefits being continued under the group remittance contract on the due date of each payment. The employee's or member's written election of continuation, together with the first premium payment required to establish premium payment on a monthly basis in advance, must be given to the group remitting agent or employer within sixty days of the date the employee's or member's benefits would otherwise terminate.

(4) Subject to paragraph one of this subsection, continuation of benefits under the group remittance contract for any person shall terminate at the first to occur of the following:

(A) The date eighteen months after the date the employee's or member's benefits under the contract would otherwise have terminated because of termination of employment or membership; or