S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3122

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            January 23, 2009
                               ___________

Introduced  by  M.  of A. BRADLEY, BENEDETTO, CANESTRARI, CLARK, COLTON,
  COOK,  ENGLEBRIGHT,  ESPAILLAT,  FIELDS,  GLICK,  GOTTFRIED,   JAFFEE,
  MAISEL,  MARKEY,  PERRY,  POWELL,  J. RIVERA,  SCHIMMINGER,  KAVANAGH,
  MAGNARELLI, BRODSKY, HYER-SPENCER -- Multi-Sponsored by --  M.  of  A.
  ABBATE,   ALFANO,   AUBRY,  BRENNAN,  CAHILL,  CARROZZA,  CHRISTENSEN,
  CYMBROWITZ, DelMONTE, DESTITO, DINOWITZ,  EDDINGTON,  FARRELL,  GALEF,
  GREENE,  GUNTHER, JACOBS, JOHN, KOON, LIFTON, LUPARDO, McENENY, ORTIZ,
  PAULIN, PEOPLES, PHEFFER,  REILLY,  ROSENTHAL,  SCARBOROUGH,  SWEENEY,
  WEISENBERG -- read once and referred to the Committee on Insurance

AN  ACT to amend the insurance law, in relation to review of health plan
  rate increases applications and to repeal certain provisions  of  such
  law relating thereto

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph 2 of subsection (e) of section 3231 of the insur-
ance law, as added by chapter 501 of the laws of  1992,  is  amended  to
read as follows:
  (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 or
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] EIGHTY-FIVE
percent of the premium FOR A SMALL GROUP HEALTH  INSURANCE  POLICY  FORM
AND  NINETY  PERCENT  FOR  AN  INDIVIDUAL  HEALTH INSURANCE POLICY FORM,
INCLUDING MEDICARE SUPPLEMENTAL INSURANCE, (II) ANY RATE INCREASE  BEING
SOUGHT  FOR  A  POLICY FORM IN A FILING OR AN APPLICATION, TOGETHER WITH
ANY OTHER RATE INCREASES IMPOSED ON SUCH POLICY FORM,  WOULD  NOT  CAUSE
THE  AGGREGATE RATE INCREASE FOR SUCH POLICY FORM TO EXCEED FIVE PERCENT
DURING ANY TWELVE MONTH PERIOD, and [(ii)] (III) the insurer submits, as

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03358-01-9
              

A. 3122                             2

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 appro-
priate 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 aggre-
gate benefits for each policy  form  filed  pursuant  to  the  alternate
procedure   set   forth   in  this  paragraph  at  least  [seventy-five]
EIGHTY-FIVE percent of the aggregate premiums collected for  the  policy
form during that calendar year FOR A SMALL GROUP HEALTH INSURANCE POLICY
FORM  AND  NINETY PERCENT FOR AN INDIVIDUAL POLICY FORM.  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] EIGHTY-FIVE percent OR
NINETY PERCENT loss ratio requirement, the insurer shall issue  a  divi-
dend or credit against future premiums for all policy holders with [that
policy  form]  THOSE POLICY FORMS 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]
EIGHTY-FIVE percent of the aggregate premiums collected for  the  policy
form  in  the  previous  calendar  year FOR SMALL GROUP HEALTH INSURANCE
POLICY FORMS, OR NINETY PERCENT FOR INDIVIDUAL HEALTH  INSURANCE  POLICY
FORMS  IN  THE  PREVIOUS CALENDAR YEAR.  The dividend or credit 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  divi-
dends  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.
  S 2. Subsections (g) and (h) of section 4308 of the insurance law,  as
added  by  chapter  504  of  the  laws  of  1995, are amended to read as
follows:
  (g)(1) Beginning January first, nineteen  hundred  ninety-six,  as  an
alternate  procedure  to  the  requirements  of  subsection  (c) of this
section, a corporation subject to the provisions of this article  desir-
ing  to  increase  or decrease premiums for any contract subject to this
section may instead submit a rate filing or application  to  the  super-
intendent  and  such  application  or  filing  shall be deemed approved,
provided that (A) the anticipated incurred loss  ratio  for  a  contract
form  shall not be less than [eighty-five] NINETY percent for individual
direct payment contracts or [seventy-five] EIGHTY-FIVE percent for small
group and small group remittance contracts, nor, except in the  case  of
individual  direct  payment  contracts with a loss ratio of greater than
one hundred five percent during nineteen hundred ninety-four, shall  the
loss ratio for any direct payment, group or group remittance contract be
more  than  one  hundred five percent of the anticipated earned premium,
and (B) the corporation submits, as part of such filing, a certification

A. 3122                             3

by a member of the American Academy of  Actuaries  or  other  individual
acceptable  to the superintendent that that corporation is in compliance
with the provisions of this subsection, based upon that  person's  exam-
ination,  including a review of the appropriate records and of the actu-
arial assumptions and methods used by the  corporation  in  establishing
premium  rates  for  contracts  subject to this section. For purposes of
this section, a small group is any group whose contract  is  subject  to
the  requirements of section forty-three hundred seventeen of this arti-
cle.
  (2) [Prior to January first, two thousand, no] NO rate  [increase  or]
decrease  may be deemed approved under this subsection if that [increase
or] decrease, together with any  other  rate  [increases  or]  decreases
imposed  on  the  same  contract  form,  would  cause the aggregate rate
[increase or] decrease for that contract  form  to  exceed  ten  percent
during  any  continuous  twelve  month period.   NO RATE INCREASE MAY BE
DEEMED APPROVED UNDER THIS SUBSECTION IF THAT  INCREASE,  TOGETHER  WITH
ANY  OTHER RATE INCREASES IMPOSED ON THE SAME CONTRACT FORM, WOULD CAUSE
THE AGGREGATE RATE INCREASE  FOR  THAT  CONTRACT  FORM  TO  EXCEED  FIVE
PERCENT  DURING ANY CONTINUOUS TWELVE MONTH PERIOD. No rate increase may
be imposed unless at least thirty days advance written  notice  of  such
increase has been provided to each contract holder and subscriber.
  (h)(1)  Each calendar year, a corporation subject to the provisions of
this article shall return, in the form of  aggregate  benefits  incurred
for  each  contract  form  filed pursuant to the alternate procedure set
forth in subsection (g) of this section, at least  [eighty-five]  NINETY
percent for individual direct payment contracts or [seventy-five] EIGHT-
Y-FIVE  percent  for  small  group and small group remittance contracts,
but, except in the case of individual direct payment  contracts  with  a
loss  ratio of greater than one hundred five percent in nineteen hundred
ninety-four, for any direct payment, group or group remittance contract,
not in excess of one hundred five  percent  of  the  aggregate  premiums
earned  for  the  contract form during that calendar year.  Corporations
subject to the provisions of this  article  shall  annually  report,  no
later than May first of each year, the loss ratio calculated pursuant to
this  subsection  for  each such contract form for the previous calendar
year.
  (2) In each case where the loss ratio for a  contract  form  fails  to
comply with the [eighty-five] NINETY percent minimum loss ratio require-
ment  for  individual  direct  payment  contracts, or the [seventy-five]
EIGHTY-FIVE percent minimum loss ratio requirement for small  group  and
small  group remittance contracts, as set forth in paragraph one of this
subsection, the corporation shall issue a  dividend  or  credit  against
future  premiums  for all contract holders with that contract form in an
amount sufficient to assure that the aggregate benefits incurred in  the
previous  calendar  year  plus  the  amount of the dividends and credits
shall equal no less than [eighty-five]  NINETY  percent  for  individual
direct  payment  contracts,  or  [seventy-five]  EIGHTY-FIVE percent for
small group and small  group  remittance  contracts,  of  the  aggregate
premiums earned for the contract form in the previous calendar year. The
dividend  or  credit shall be issued to each contract that 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 cred-
its 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 paragraph one of this subsection shall
include a corporation's calculation of the  dividends  and  credits,  as

A. 3122                             4

well  as  an explanation of the corporation'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 super-
intendent  by  regulation. Such regulations shall include provisions for
the distribution of a dividend or credit in the event of cancellation or
termination by a contract holder or subscriber.
  (3) In each case where the loss ratio for a  contract  form  fails  to
comply  with the one hundred five percent maximum loss ratio requirement
of paragraph one of this subsection, the corporation shall  institute  a
premium  rate increase in an amount sufficient to assure that the aggre-
gate benefits incurred in the previous calendar year shall equal no more
than one hundred five percent of  the  sum  of  the  aggregate  premiums
earned  for  the  contract  form  in  the previous calendar year and the
aggregate premium rate increase. The rate increase shall be  applied  to
each  contract  that  was  in  effect as of December thirty-first of the
applicable year and remains in effect as of the date the  rate  increase
is imposed. All rate increases must be imposed by September thirtieth of
the  year  following  the calendar year in which the loss ratio require-
ments were not satisfied. The annual report required by paragraph one of
this subsection shall include a corporation's calculation of the premium
rate increase, as well as an explanation of the  corporation's  plan  to
implement the rate increase. The instructions and format for calculating
and reporting loss ratios and implementing rate increases shall be spec-
ified by the superintendent by regulation.
  S  3. Subsection (i) of section 4308 of the insurance law, as added by
chapter 504 of the laws of 1995, is amended to read as follows:
  (i) The alternate procedure described in subsections (g)  and  (h)  of
this  section  shall apply to individual direct payment contracts issued
pursuant to sections four thousand three  hundred  twenty-one  and  four
thousand  three  hundred twenty-two of this article on and after January
first, nineteen hundred ninety-seven AND TO INDIVIDUAL OR GROUP POLICIES
OF MEDICARE SUPPLEMENTAL INSURANCE ISSUED BY A  CORPORATION  OR  INSURER
ORGANIZED OR LICENSED PURSUANT TO THIS CHAPTER.
  S 4. Subsection (j) of section 4308 of the insurance law is REPEALED.
  S 5. This act shall take effect January 1, 2010.