New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
ONE COMMERCE PLAZA
ALBANY, NEW YORK 12257

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following opinion on November 8, 2005, representing the position of the New York State Insurance Department.

Re: New York State Jurisdiction Over Health Insurance Premium Rates.

Questions Presented:

1. Does the New York State Insurance Department retain jurisdiction over premium rates for guaranteed renewable health insurance policies issued and delivered in New York when the policyholder moves to another state?

2. Does the New York State Insurance Department assert jurisdiction over premium rates for guaranteed renewable health insurance policies issued and delivered in another state when the policyholder moves to New York?

Conclusions:

1. Yes, the New York State Insurance Department retains jurisdiction over premium rates for guaranteed renewable health insurance policies issued and delivered in New York when the policyholder moves out of state.

2. No, the New York State Insurance Department does not assert jurisdiction over premium rates for guaranteed renewable health insurance policies issued and delivered in another state when the policyholder moves to New York.

Facts Presented:

The inquirer provided the following hypothetical scenario:

If a guaranteed renewable Medicare supplement plan is bought in New York and the policyholder moves to Florida, who then has jurisdiction over the premium rates of the policy? Would the policyholder receive premium increases based upon those filed in New York?

Would Florida retain jurisdiction if the policy had been issued in Florida and the policyholder moves to New York?

Analysis:

N.Y. Comp. Codes R. & Regs. Tit. 11, § 52.11 defines Medicare supplement insurance as follows:

Medicare supplement insurance is an individual or group policy or certificate of accident and health insurance which is advertised, marketed or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical or surgical expenses of persons eligible for Medicare. This definition is applicable regardless of whether the policy form is labeled as Medicare supplement insurance.


(b) Medicare supplement insurance shall not include:


(1) a policy or certificate which provides continued coverage for persons beyond age 65;


(2) a policy or certificate issued pursuant to a contract under section 1876 of the Federal Social Security Act (42 U.S.C. section 1395 et seq.);


(3) a policy or certificate issued under a demonstration project specified in 42 U.S.C. section 1395ss(g)(1);


(4) a policy or contract offered through one or more employers or labor organizations, or through the trustees of a fund established by one or more employers or labor organizations, or combination thereof, for employees or former employees, or a combination thereof, or for members or former members, or a combination thereof, of the labor organizations; or


(5) a Medicare+Choice plan under part C of Medicare (42 U.S.C. section 1395w-21 et seq.).

If the Medicare supplement policy was purchased after 1990, then it is a guaranteed renewable policy. N.Y. Comp. Codes R. & Regs. Tit, § 52.17(a)(5)–(7)(1999)(Regulation 62) address guaranteed renewable policies and state:

(5) The term noncancellable or noncancellable and guaranteed renewable may be used only in a policy which the insured has the right to continue in force by the timely payment of premiums set forth in the policy until age 65 or, as an alternative with respect to policies defined in section 52.8 of this Part, until receipt of retirement benefits under the Social Security Act of the United States. During such period the insurer has no right to make unilaterally any change in any provision of the policy while the policy is in force.


(6) Except as provided in paragraph (5) of this subdivision, the term guaranteed renewable may be used only in a policy which the insured has the right to continue in force by the timely payment of premiums until age 65 or, as an alternative with respect to policies defined in section 52.8 of this Part, until receipt of retirement benefits under the Social Security Act of the United States. During such period the insurer has no right to make unilaterally any change in any provision of the policy while the policy is in force, except that the insurer may make changes in premium rates by classes.


(7) The words guaranteed renewable shall not be used in a policy unless the insurer's right to change rates is also stated in such a way that it is not minimized or made obscure.

Guaranteed renewable policies are automatically renewed as long as the policyholder continues to pay his or her premium. While the policy terms may not be changed unilaterally by the insurer, policy rates are subject to change if the policy clearly states that they are.

N.Y. Ins. Law § 3103(b) (McKinney 2000) states:

No policy of insurance or contract of annuity delivered or issued for delivery in this state shall provide that the rights or obligations of the insured or of any person rightfully claiming thereunder, with respect to: (1) a policy of life, accident and health insurance or contract of annuity upon a person resident in this state . . . shall be governed by the laws of any jurisdiction other than this state.

N.Y. Comp. Codes R. & Regs. tit. 11, § 52.40(c)(1) (1995) (Regulation 62), states:

A rate filing shall accompany every policy, and rider or endorsement affecting benefits, submitted to the department for approval. Any subsequent change in rates applicable to any such policy, rider or endorsement originally delivered or issued for delivery in New York shall also be submitted to the department. . . .

Section 52.40(d)(2)(ix) further requires that with respect to rate revisions or additions to previously approved rate filings, the filings must include "a statement that the rates approved by the superintendent will be applied to all policies originally delivered or issued for delivery in New York, regardless of place of current residence." (emphasis added).

In view of the aforementioned, the New York State Insurance Department has taken the position that if a guaranteed renewable health insurance policy is originally issued and delivered in New York, then New York law continues to govern all subsequent renewals and New York has continued jurisdiction over such policies.

Based upon above stated position, it follows that the New York State Insurance Department will not assert jurisdiction over premium rates for guaranteed renewable health insurance policies issued and delivered in another state when the policyholder moves to New York. In this case the New York State Insurance Department takes the position that the state in which the policy was originally issued and delivered, retains jurisdiction over that policy.

In the hypothetical scenario presented, New York would retain jurisdiction over premium rates for a guaranteed renewable Medicare supplement plan that is bought in New York when the policyholder moves to Florida and the policyholder could receive premium increases based upon those filed in New York. Finally, if the policy had been issued in Florida and the policyholder moves to New York, as far as the statutes of New York are concerned, Florida would retain jurisdiction.

For further information please contact Special Counsel Athan Shinas at the Albany Office.