Insurance Circular Letter No. 2 (2022)

February 1, 2022

STATUTORY REFERENCES: N.Y. Insurance Law §§ 1124(c), 3217-i(a)(1), 3239, 4224(c), and 4306-h(a)(1)

I. Purpose

Coronavirus disease 2019 (“COVID-19”) cases continue to cause severe illness and deaths among the unvaccinated. Vaccination is the best defense against COVID-19 hospitalization and death. While many adult New Yorkers have been vaccinated, vaccination rates among children remain relatively low.

The purpose of this circular letter is to encourage insurers authorized to write accident and health insurance in this 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 with respect to comprehensive health insurance coverage (collectively, “issuers”), to offer rewards and incentives when insureds, including children, receive vaccinations against COVID-19.

II. Rewards and Incentives for COVID-19 Vaccination

Insurance Law § 4224(c) applies to individual and group accident and health insurance and generally prohibits an issuer from paying or offering to pay, or giving or offering to give, to a person a rebate or inducement that is not specified in the insurance policy or contract. However, this section permits an issuer to pay or offer to pay, or give or offer to give, to a person any valuable consideration, including merchandise or periodical subscriptions, not exceeding $25 in value, that is not specified in the policy or contract. The $25 limitation refers to market value available to the general public and not to a special rate that the issuer may negotiate. See OGC Opinion No. 88-102 (NILS) (Dec. 8, 1988).

The $25 limitation applies to each insured person. It also applies to all such valuable consideration in total provided during any policy or contract term. In other words, an issuer may provide two gift cards, one totaling $10 and the other $15, or a gift card and another item, but may not give a combination of gift cards or other items that exceed the $25 limitation per policy or contract term. An issuer may not pay or offer to pay, or give or offer to give, valuable consideration that equals or exceeds the insured person’s premium. In addition, the valuable consideration should be paid or offered in a fair and nondiscriminatory manner to like persons. If the valuable consideration exceeds $25 in market value, then it must be specified in the policy or contract and have a legitimate nexus to the insurance. See OGC Opinion No. 10-12-02 (December 3, 2010) and OGC Opinion No. 07-06-03 (June 4, 2007).

Federal regulations permit issuers to offer nondiscriminatory wellness programs in group health insurance policies and contracts.¹ In addition, federal regulations do not prohibit wellness programs in individual health insurance policies when such programs comply with state law and are offered to all similarly situated individuals.² Insurance Law § 3239 authorizes an issuer to offer wellness programs to similarly situated group accident and health insureds when specified in the insurance policy or contract. In addition, Insurance Law §§ 3217-i(a)(1) and 4306-h(a)(1) include wellness services in the essential health benefits package for individual and small group policies and contracts. The Department of Financial Services (“Department”) has approved a wide variety of wellness programs and rewards and incentives in individual and group accident and health insurance policies and contracts that generally promote the health and wellness of insureds. For example, the Department has approved gift cards to insureds for getting the annual flu shot.

As issuers are uniquely positioned to assist in the effort to increase vaccination and booster rates, the Department strongly encourages issuers to offer rewards and incentives when unvaccinated insureds, including children, receive the vaccine or a booster shot. If an issuer offers a reward or incentive that does not exceed $25 in market value, then the issuer does not need to specify the reward or incentive in the individual or group insurance policy or contract. If an issuer offers a reward or incentive that exceeds $25 in market value, then the issuer will need to specify the reward or incentive in the individual or group insurance policy or contract by filing with the Department an amendment or rider to the issuer’s currently approved policy or contract forms. To the extent that issuers have approved wellness programs in place that are broad enough to include COVID-19 vaccination rewards or incentives, issuers should fully implement those incentives. The Department will expedite approval of submissions necessary to initiate a COVID-19 vaccination reward or incentive.

III. Conclusion

It is essential that as many New Yorkers as possible are vaccinated against COVID-19. Offering rewards and incentives to encourage receiving the COVID-19 vaccination can be an important component in an overall strategy to accomplish the goal of higher vaccination rates among all New Yorkers, including children. Accordingly, the Department strongly encourages issuers to offer rewards and incentives to insureds to help increase vaccination and booster rates.

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

Very truly yours,

Lisette Johnson
Chief, Health Bureau

¹ 26 C.F.R. § 54.9802-1(f); 29 C.F.R. § 2590.702(f); and 45 C.F.R. § 146.121(f).

² 78 FR at 33167.