New York State
Insurance Department

 (11 NYCRR 360)
FOURTH AMENDMENT TO REGULATION NO. 145

RULES TO ASSURE AN ORDERLY IMPLEMENTATION AND ONGOING
OPERATION OF OPEN ENROLLMENT AND COMMUNITY RATING
OF INDIVIDUAL AND SMALL GROUP HEALTH INSURANCE
 

          I, NEIL D. LEVIN, Superintendent of Insurance of the State of New York, pursuant to the authority granted by Sections 201, 301, 1109, 3201, 3216, 3217, 3221, 3231, 3232, 3233, 4235, 4237, Article 43 and Article 45 of the Insurance Law, Chapter 501 of the Laws of 1992 and Chapter 661 of the Laws of 1997, do hereby promulgate the following Fourth Amendment to Part 360 of Title 11 of the Official Compilation of Codes, Rules and Regulations of the State of New York (Regulation No. 145), to take effect upon publication in the State Register to read as follows:

(NEW MATTER UNDERLINED; DELETED MATTER IN BRACKETS) 

          Section 360.2(f) is hereby amended to read as follows:
          (f) Small group health insurance policy means a group remittance policy written by an insurer pursuant to section 4304 of the Insurance Law and a group health insurance policy covering from [3] two to 50 employees or members, exclusive of dependents and spouses, and policies issued to or through association groups as defined in subdivision (a) of this section. In determining the size of a small group reference should be made to subdivisions (i) and (j) of section 360.4 of this Part. [A small group health insurance policy also means a group health insurance policy covering individual proprietors and groups of two if the insurer does not offer policies of individual insurance.] Insurers may choose to classify individual proprietors within the small group category provided that any such classification is applied consistently to all individual proprietors. A small group health insurance policy does not include a policy covering only: long term care benefits, nursing home benefits, home care benefits, dental or vision care services, hospital or surgical indemnity benefits with specific dollar amounts unless the dollar amounts exceed the amounts required to meet the definitions of basic hospital and basic medical insurance in sections 52.5 and 52.6 of this Title, accident only indemnity benefits, accidental death and dismemberment benefits, prescription drug benefits or disability income benefits.

          Section 360.3(a)(1)(ii) is hereby amended to read as follows:
          (ii) Minimum participation requirements as set forth in section 4235(c)(1) must continue to be utilized. [However, for purposes of determining said participation requirements, insurers must include as participating all eligible employees or members of the group covered under all the alternative health maintenance organization plans made available by the group.] Health maintenance organizations may not establish any minimum participation requirements within a group and must accept one person within a small group who elects the HMO coverage.

          Section 360.3(a)(9) is hereby amended to read as follows:
          (9) Where an eligible employee or member or [dependents] dependent or spouse of such employee or member rejects initial enrollment in a [health benefit plan] group or blanket policy that provides hospital, surgical or medical expense insurance, rules may be established limiting future enrollment to specified time periods, however, such rules shall not apply to such employee, member, [or dependents] dependent or spouse if:
          (i) [If] the individual was covered under another [health benefit] plan or policy at the time the individual was initially eligible to enroll[;] and has lost coverage under [another health benefit] the other plan or policy as a result of [termination of employment, the termination of the other plan’s coverage, death of a spouse, or divorce] exhaustion of the period of continuation under state or federal law; the loss of eligibility for one or more of the reasons specified in sections 3221(q)(5)(B)(ii) or 4305(k)(5)(B)(ii) of the Insurance Law; or termination by the plan sponsor or policyholder of contributions toward the payment of premium for the other plan or policy, provided the individual applies for enrollment within 30 days after termination of coverage provided under [another health benefit] the other plan[.] or policy;
          (ii) [A] a court has ordered coverage be provided for a spouse or minor children under a covered employee or member’s health benefit plan and the request for enrollment is made within 30 days after issuance of the court order[.]; or
          (iii) any federal or state law requires that coverage be provided under the policy without regard to the enrollment period specified in the policy, provided the individual applies for enrollment within 30 days after the occurrence of the event triggering the right to enroll or within any time period specified in the law requiring the coverage, whichever is longer.

          Section 360.4(b) and (c) is hereby amended to read as follows:
          (b) Insurers, other than health maintenance organizations, are not required to offer policies of individual insurance. For those insurers choosing to do so, all applicants must be accepted subject to permissible eligibility rules set forth in this Part and no applicant may be rejected based on failure to apply for, purchase or be accepted for another type of insurance coverage. Individual proprietors [and groups of two] may be classified in the individual rating category by the insurer, but any such classification must be consistently applied to all individual proprietors [and groups of two].
          (c) Insurers, other than health maintenance organizations, are not required to offer small group policies. For those insurers choosing to do so coverage must be offered to all small groups comprised of [three] two to [fifty] 50 employees or members and all applicants must be accepted subject to permissible eligibility rules set forth in this Part, and no applicant may be rejected based on a failure to apply for, purchase or be accepted for another type of insurance coverage. [If an insurer offering small group policies does not offer policies of individual insurance, individual proprietors and groups of two must be accepted in the small group rating category subject to permissible eligibility rules set forth in this Part.] Insurers may choose to classify individual proprietors within the small group category provided that any such classification is applied consistently to all individual proprietors. No insurer may limit the issuance of any policy form to small groups of certain sizes, such as only groups of 25 to 50.

          Section 360.4(g) is hereby amended to read as follows:
          (g) Those insurers that decide to withdraw from the individual and/or small group market by class nonrenewal or sale of the business must provide at least [60] 180 days prior written notice of their intention to do so to the superintendent with a plan to minimize potential disruption in the market place occasioned by such withdrawal.

          Section 360.5(a) is hereby amended to read as follows:
          (a) [The] In addition to the specific prohibitions set forth in sections 3221(q) and 4305(k) of the Insurance Law, the following underwriting practices are prohibited in regard to an insurer’s decision whether to offer or accept health insurance applications:

          (1) lists of excluded industries or occupations;

          (2) use of medical or laboratory tests;

          (3) medical examinations;

          (4) questions about avocations, hobbies, or other activities;

          (5) attending physician statements, questionnaires or any investigations or reviews regarding health status, health history, family health status or sexual orientation;

          (6) medical underwriting information obtained pursuant to other lines of business not subject to chapter 501 of the Laws of 1992 (such as applications for life insurance, disability income insurance, or long term care insurance);

          (7) medical underwriting information obtained from other sources (such as agents, brokers, consultants, third-party administrators, trustees,associations, group policyholders or the Medical Information Bureau); and

          (8) consideration of the nonprofit status of the small group.

          Section 360.5(d) is hereby amended to read as follows:
          (d) Applicants for group or individual insurance may not be denied coverage based upon eligibility for coverage under another group or individual plan unless the applicant is actually covered by another plan. However, applicants for an individual health insurance policy may be denied coverage where the individual is eligible for comparable group coverage through an employer [or where the employer has refused coverage to the individual under the employer’s plan due to the individual’s age, sex, health status, or occupation].

          Section 360.6 is hereby repealed and a new section 360.6 is added to read as follows:
          360.6 Pre-existing condition waiting periods. Pre-existing condition waiting periods are governed by the rules set forth in section 52.20 of this Title.

          Section 360.7(a), (b) and (c) is hereby amended to read as follows:
          (a) Continuation of benefits coverage is to be provided pursuant to the requirements of sections 3221, [and] 4304 and 4305 of the Insurance Law.
          (b) Notice requirements applicable to continuation of benefits.
         (1) An insurer shall provide in the policy, contract and certificate written notice of the right to continuation of benefits coverage provided by Insurance Law sections 3221, [and] 4304 and 4305 and shall notify the employer, policyholder or remitting agent, at the time of commencement of coverage, of the importance of the notification of the continuation benefit to each covered employee or member and the spouse of the employee or member.
          (2) In the case of events described in section 3221(m)(4)(C), [and] section [4304(h)(4)(C)] 4304(k)(4)(C) and section 4305(e)(4)(C) of the Insurance Law, the employee or member or spouse of the employee or member (if any) shall be responsible for notifying the employer, policyholder or remitting agent, as applicable, of the occurrence of any such event within 60 days of such occurrence.
          (3) In the case of determinations of disability made as described in section 3221(m)(4)(D), [and] section [4304(h)(4)(D)] 4304(k)(4)(D) and section 4305(e)(4)(D) of the Insurance Law, the employee or member or spouse of the employee or member (if any) shall be responsible for notifying the employer, policyholder or remitting agent, as applicable, within 60 days of such determination and also responsible for notifying the employer, policyholder or remitting agent, as applicable, within 30 days of any final determination that the disability in question no longer exists.
          (4) Within 14 days of receipt of the notification described in paragraphs (2) and (3) of this subdivision, and within 14 days of any other event, condition or action which, as described in [subsections] sections 3221(m), [and] 4304(k) and 4305(e) of the Insurance Law, cause termination of employment or membership in the class or classes eligible for coverage under the policy or contract, the employer, policyholder or remitting agent, as applicable, shall notify the employee or member or spouse of the employee or member (if any) of their rights under the continuation of benefits coverage described in subdivision (a) of this section.
          (5) For purposes of the notification described in paragraph (4) of this subdivision, such notification to an individual who is the employee or a spouse of the employee or member shall be treated as notification to all other eligible dependents residing with such spouse at the time such notice is given.

          (c) Election.
         (1) Written request to elect continuation of coverage benefits must be given to the employer, policyholder [,] or remitting agent, as applicable, by the employee or member or spouse of the employee or member (if any) within 60 days of the events described in Insurance Law [subsections] sections 3221(m), [and] 4304(k) and 4305(e) which cause termination of coverage for the employee or member or eligible dependent of such employee or member [;] or within 60 days of the date of the notice described in paragraph (b)(4) of this section, whichever period ends later.
          (2) Such request for continuation of coverage for eligible dependents who are not the spouse of the employee or member may be made within such time period described in paragraph (1) of this subdivision by the employee or member or the spouse of the employee or member on such eligible dependents’ behalf.



     I, Neil D. Levin, Superintendent of Insurance of the State of New York, do hereby certify that the foregoing Fourth Amendment to Regulation No. 145 (11 NYCRR 360) was duly adopted by me on this day pursuant to the authority granted by Sections 201, 301, 1109, 3201, 3216, 3217, 3221, 3231, 3232, 3233, 4235, 4237, Article 43 and Article 45 of the Insurance Law, Chapter 501 of the Laws of 1992 and Chapter 661 of the Laws of 1997, to be effective upon publication in the State Register.

     Pursuant to the provisions of the State Administrative Procedure Act, this Fourth Amendment to Regulation No. 145 was previously adopted as an emergency measure on February 10, 1998 and on May 11, 1998. This regulation amendment supercedes the emergency measure without substantive change. The Notice of Proposed Rulemaking for this Amendment was published in the State Register on May 27, 1998. No other publication or prior notice is required by Statute.

_____________________________

Neil D. Levin
Superintendent of Insurance

July 14, 1998