Insurance Circular Letter No. 13 (2021)

December 29, 2021

STATUTORY REFERENCES: No Surprises Act (Pub. L. No. 116-260, 134 Stat. 1182, Division BB § 109); 42 U.S.C. § 300gg et seq.

I. Purpose

The purpose of this circular letter is to provide guidance to insurers authorized to write accident and health insurance in New York State, Article 43 corporations, health maintenance organizations, student health plans certified pursuant to Insurance Law § 1124, municipal cooperative health benefit plans, and prepaid health services plans (collectively, “issuers”) regarding the requirements to disclose direct and indirect insurance producer compensation to insureds in the individual comprehensive health insurance market under the federal No Surprises Act (“NSA”).

II. Background

The NSA was signed into law as part of the Consolidated Appropriations Act of 2021 (Public Law 116-260; Division BB § 109) on December 27, 2020 and applies with respect to plan years beginning on or after January 1, 2022. NSA § 202 amends 42 U.S.C. § 300gg et seq. by establishing certain requirements on issuers to disclose direct and indirect insurance producer compensation to insureds with individual comprehensive health insurance coverage.

On September 16, 2021, the U.S. Department of Health and Human Services, the U.S. Department of Labor, the U.S. Department of the Treasury, and the U.S. Office of Personnel Management (“departments”) issued a proposed rule entitled “Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement.” This proposed rule seeks to implement the NSA provisions regarding disclosure of direct and indirect insurance producer compensation.

III. Discussion

1. Disclosures to Insureds in the Individual Market

   42 U.S.C §300gg-46(a) requires issuers offering individual comprehensive health insurance coverage or issuers offering short-term limited duration insurance coverage to disclose to an insured the amount of direct or indirect compensation provided by the issuer to an insurance producer associated with enrolling individuals in such coverage. As short-term limited duration coverage is not permitted in New York, this provision applies to issuers offering individual comprehensive health insurance coverage in New York. See Insurance Circular Letter No. 7 (2018).

   The issuer must make the disclosure prior to the individual finalizing plan selection and must include the disclosure on any documentation confirming the individual’s enrollment. See 42 U.S.C §300gg-46(b). In addition, issuers must annually report to the Secretary of Health and Human Services, prior to the beginning of open enrollment, any direct or indirect compensation provided to an insurance producer associated with enrolling individuals. See 42 U.S.C § 300gg-46(c).

IV. Conclusion

DFS expects issuers to fully cooperate in implementing the disclosure requirements placed on issuers offering individual comprehensive health insurance coverage introduced by the NSA. In addition, issuers are reminded to review the proposed rule issued by the departments on September 16, 2021 and follow any requirements implemented once final.

Please direct any questions regarding this circular letter by email to [email protected].

Very truly yours,

Lisette Johnson
Chief, Health Bureau