New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter XIV - Individual And Small Group Health Insurance
Part 360 - Rules To Assure An Orderly Implementation And Ongoing Operation Of Open Enrollment And Community Rating Of Individual And Small Group Health Insurance
Section 360.11 - Community rates applicable to commercial insurers, article 43 corporations, and HMOs

(a) Pooling of experience of different community-rated policies will be required where the superintendent determines that the policy form provides substantially similar benefits as another community-rated policy offered by the insurer in that market (individual or small group). Policies issued during different time periods under different forms may be determined to provide substantially similar benefits. Insurers should not develop separate community rates without substantial benefit variations. Benefit variations which shall not generally be considered substantial shall include, but not be limited to, variations in deductibles, coinsurance amounts, the number of days or visits covered or the adding or deleting of benefits which do not substantially affect premiums for the policy.

(b) The experience pool consisting of claims costs, marketing costs and administrative costs maintained for developing community rates for individuals may be separate from the experience pool maintained for developing community rates for groups. Insurers which currently utilize one experience pool for developing community rates for both individuals and groups are encouraged, but not required, to continue that practice. Insurers which currently utilize one experience pool for developing community rates for both small groups subject to chapter 501 and large groups not subject to chapter 501 are encouraged, but not required, to continue that practice.

(c) Rate tiers for family units (e.g., different community rates for individuals, two-person families and larger families) are permitted. However, the rate differences must be based upon the cost differences for the different family units and the rate tiers must be uniformly applied. Different rate tiers may apply to individuals than apply to small groups.

(d) The geographic rating areas filed as of July 17, 1992 may be retained or altered if, as part of the review and approval process, the superintendent determines that:

(e) Community rates shall change in accordance with the following rules, unless otherwise approved by the superintendent:

(f) An insurer may only charge a small group or an individual the community rate as approved by the superintendent. The only exception shall be in the event an insurer renders a rate quote to the group prior to the date the insurer receives the superintendent's written approval of that rate, and in that instance the rate quoted to the group may only be the proposed rate as submitted by the insurer to the superintendent and which is pending approval before the superintendent. In the event the rate approved by the superintendent varies from the rate the insurer proposed to the superintendent and quoted to the group, the variance must be reconciled at the next premium renewal date using a prospective adjustment. The prospective adjustment may involve a surcharge to the approved rates implemented by use of an approved rider or remitting agent agreement. This rider may be applied to a group contract or group remittance arrangement where the group remitting agent agrees to accept liability for payments due to the insurer. Any difference between the actual approved rate and the estimated annual rate must be reconciled by use of an advance premium deposit account (the accumulated surcharges). Settlement of the account must occur no later than 12 months after the end of the prior contract year or upon termination of the contract if earlier. Advance premium deposit accounts and the settlements of such accounts do not require the approval of the superintendent. In the event the rate increase is less than expected, the extra premium collected (overage) will be applied towards the following year's premium. If the rate increase is an amount in excess of what had been expected, then an adjustment for the shortage will be made, commencing at the yearly anniversary date, to ensure a level monthly rate of premium payment.

(g) Premium load and discount factors for the demographic pools, as set forth in section 361.3 of this Title shall be calculated as a constant percentage for each policy form across all pool areas in accordance with the following rules:

(h) As a general rule, insurers which are in both the individual market and the small group market shall compute the adjustments required by Part 361 of this Title separately for the individual market product than for the small group product and apply the increased, or decreased, cost attributable to Part 361 to that particular product. Insurers which have more than one community rated policy form within the small group or individual market shall compute the adjustment required by Part 361 separately for each community rated policy form within that market.

(i) As part of the rate filing of each separately community rated policy form, a separate page shall show the percentage or dollar adjustment to premiums for the form that is mandated by its share of one or more of the regional demographic pools and pools for specified medical conditions. Such page shall record the appropriate adjustments for each calendar quarter commencing with the second quarter of 1993 and shall be updated each time a change in the adjustment is required by the operation of the pooling mechanisms as described in Part 361 of this Title. The filing of all such adjustments shall be accompanied by exhibits detailing their calculation.

(j) Rate differences intended to reflect differences in expenses such as per case charges, premium volume discount or load scales and similar rate differences are not permitted.

(k) Commissions and marketing practices in the small group market must be uniformly applied to all size cases. If an insurer pays commissions on any small group case, then that insurer must pay commissions on all small group cases, using the same commission scale. The commission scale must pay a flat percentage of premium or a percentage which decreases as premium increases or a flat dollar amount per person or a flat dollar amount per case. Payment of commissions or other sales compensation based on loss ratio or in any way reflecting or dependent upon the experience of any case or group of cases and payment of no commissions or reduced commissions on cases below a specified size are prohibited practices. An insurer is not prohibited from selecting, appointing or using the services of agents or brokers in accordance with its normal selection practice. However, the use of agents or brokers cannot be limited to a certain size market, such as, cases of 10 or more lives. An insurer must notify every licensed agent or broker with whom it does business of current commission practices, revised if necessary to comply with this subdivision, by March 1, 2001 and at least annually thereafter.