New York Codes, Rules and Regulations, Part 361, Section 361.3 - Pooling of variations in costs attributable to variations in demographics | New York Codes, Rules and Regulations

(a) In each pool area, two demographic pools are established. Each pool operates independently; that is, all calculations and payments described below are made for each pool independently of any other pool.

(b) In each pool area:

(1) one pool, for use until December 31, 1999, deals with individual health insurance policies and small group health insurance policies, other than Medicare supplement insurance policies; and

(2) one pool deals with Medicare supplement insurance policies.

(c) The average demographic factor is determined for each carrier participating in a pool, with respect to its participation in each pool separately, as follows:

(1) Assign the appropriate age/sex claim factor and age/sex premium factor to each family unit covered by a particular carrier under a pooled insurance contract or policy on the date as of which the average demographic factor is being calculated (the calculation date), according to the Tables of Age/Sex Factors in this paragraph.

Table of Age/Sex Factors (For Other Than Medicare Supplement Insurance)

Family Units With Coverage of a Single Individual			Family Units With Dependent Coverage (e.g., Employee Plus Spouse and Children)
Claim Factor		Premium Factor
Age of Family Unit*	Male	Female	Male	Female	Claim Factor	Premium Factor
Under 30	0.54	1.06	1.14	1.14	2.10	2.80
30-39	0.70	1.21	1.14	1.14	2.60	2.80
40-49	1.15	1.35	1.14	1.14	2.70	2.80
50-54	1.50	1.60	1.14	1.14	2.80	2.80
55-59	1.80	1.90	1.14	1.14	3.70	2.80
60-64	2.36	2.17	1.14	1.14	4.20	2.80
Over 64 (Medicare Primary)	0.90	0.90	1.14	1.14	1.80	2.80
Over 64 (Medicare Not Primary)	3.14	2.77	1.14	1.14	4.80	2.80

_____ *Age is determined as calendar year for which the calculation is being made minus calendar year of birth.

Table of Age/Sex Factors (For Medicare Supplement Insurance)

**Age of Family Unit***	*Claim Factor Males and Females*	*Premium Factor Males and Females*
Under 65	2.40	1.0
65-69	0.80	1.0
70-74	0.88	1.0
75-79	1.04	1.0
Over 79	1.20	1.0

_____ *Age is determined as calendar year for which the calculation is being made minus calendar year of birth.

(2) Add the claim factors from paragraph (1) of this subdivision for all family units covered by the pooled insurance contract or policy to obtain a total claim factor for that contract/policy. Add the premium factors from paragraph (1) for all family units covered by the pooled insurance contract or policy to obtain a total premium factor for that contract/policy.

(3) Divide the total claim factor from paragraph (2) of this subdivision by the total premium factor from paragraph (2) to obtain the average factor for that contract or policy.

(4) Multiply the average factor from paragraph (3) of this subdivision by the annualized premium for the contract or policy as of the calculation date.

(5) Repeat the calculations in paragraphs (1)-(4) of this subdivision for each pooled insurance contract or policy in force as of the calculation date, and sum the results of paragraph (4) for all such contracts/policies.

(6) Divide the sum obtained in paragraph (5) of this subdivision by the total annualized premium for that carrier for all pooled insurance in force as of the calculation date. The result is the desired average demographic factor for that carrier.

Annualized premium means one of the following, as appropriate for a particular policy or contract:

*Frequency of Premium Payment*	*Definition of Annualized Premium*
Annually	annual premium
Semi-annually	2 times the semi-annual premium
Quarterly	4 times the quarterly premium
Monthly	12 times the monthly premium
Other	consistent with the above

(d) The regional demographic factor for all carriers combined is determined for each pool, based upon the average demographic factors of all carriers participating in that pool, weighted by their total annualized premiums as of the calculation date.

(e) Initial payments to the pools.

(1) The average demographic factor for each carrier participating in a pool shall be determined as of the beginning of each calendar quarter, starting as of April 1, 1993 and, for pools that deal with individual health insurance policies and small group health insurance policies, other than Medicare supplement insurance policies, ending as of December 31, 1999. The regional demographic factor for each pool shall also be determined as of the beginning of each calendar quarter, starting as of April 1, 1993 and, for pools that deal with individual health insurance policies and small group health insurance policies, other than Medicare supplement insurance policies, ending as of December 31, 1999.

(2) If the average demographic factor of a carrier participating in a demographic pool, determined as of the beginning of a calendar quarter starting on or after April 1, 1993, is less than the regional demographic factor for that pool as of the beginning of that quarter, the carrier shall pay to the demographic pooling fund a percentage of its premiums earned for pooled insurance during the second succeeding quarter, excluding premiums charged for anticipated payments to the demographic pooling fund (e.g., the determination of demographic factors as of April 1, 1993 affects payments to the demographic pooling fund attributable to the period October 1, 1993 through December 31, 1993). The percentage of premiums earned during a particular quarter to be paid to the demographic pooling fund is calculated as the product of subparagraphs (i), (ii), and (iii) of this paragraph:

(i) - 100

(ii) The ratio of claims projected to be incurred during the quarter under its pooled insurance to the premiums projected to be earned during that quarter for pooled insurance without consideration of this additional percentage (i.e., the projected incurred loss ratio, exclusive of demographic pooling).

(iii) 1.0 minus the ratio of the regional demographic factor for that pool, as of the beginning of the second preceding quarter, to the average demographic factor of the carrier for that pool, as of the beginning of the second preceding quarter.

(3) For the second and third calendar quarters of 1993, a carrier participating in a demographic pool as of the beginning of a quarter shall pay to the demographic pooling fund a percentage of its premiums earned during each quarter, excluding premiums charged for anticipated payments to the demographic pooling fund, if its average demographic factor as of April 1, 1993 is projected to be less than the regional demographic factor for the pool area, as stated in the following table:

*Regional Demographic Factors*
*Pool Area*	*Other than Medicare Supplement*	Medicare Supplement
Albany area	1.04	1.05
Buffalo area	1.03	1.03
Mid-Hudson area	1.02	1.05
New York City area	1.03	1.05
Rochester area	0.99	1.04
Syracuse area	1.00	1.05
Utica/Watertown area	1.01	1.05

The percentage of premium earned during each of these quarters to be paid to the demographic pooling fund is calculated as the product of subparagraphs (i), (ii) and (iii) of this paragraph:

(i) - 100.

(ii) The ratio of claims projected to be incurred during the quarter under its pooled insurance to the premiums projected to be earned during that quarter for pooled insurance, without consideration of this additional percentage (i.e., the projected incurred loss ratio, exclusive of demographic pooling).

(iii) 1.0 minus the ratio of the regional demographic factor for the pool area, as listed above in this paragraph, to the projected average demographic factor of the carrier for that pool, as of April 1, 1993.

(4) Payment to the demographic pooling fund, in accordance with paragraph (2) or (3) of this subdivision, shall be due 30 days after the end of each quarter. Payment made after that date shall include the amount calculated in accordance with paragraph (2) of this subdivision, plus interest at the rate of one percent per month, or portion thereof, beyond the date the payment was due.

(f) Initial collections from the pools.

(1) In October of 1993 and every three months thereafter, but only until December 31, 1999, for pools that deal with individual health insurance policies and small group health insurance policies, other than Medicare supplement insurance policies, a carrier participating in a demographic pool shall be entitled to collect from a demographic pooling fund if its average demographic factor for that pool at the beginning of the second preceding calendar quarter is greater than the regional demographic factor for that pool as of that date.

(2) Subject to the limitation in the next sentence, and in subdivision (i) of this section, a carrier which is entitled to collect from a demographic pooling fund may collect the product of subparagraphs (i) and (ii) of this paragraph:

(i) the claims incurred under its pooled insurance during the second preceding calendar quarter, minus any amounts collected or collectible in accordance with section 361.4(c) and (d) of this Part, for medical care rendered during that quarter;

(ii) 1.0 minus the ratio of the regional demographic factor for that pool at the beginning of the second preceding calendar quarter to the carrier's average demographic factor for that pool as of that date. If the amount of money in the demographic pooling fund is not sufficient to pay all carriers the amounts they are entitled to collect in accordance with this paragraph, the amounts they are entitled to collect are reduced proportionately to match the fund.

(3) Any excess of the demographic pooling fund over the total amount which carriers are entitled to collect in accordance with paragraph (2) of this subdivision may be paid to carriers entitled to additional payments, as stated in paragraph (h)(5) of this section. Each carrier shall receive a proportionate share of the excess, determined as the ratio of the additional payment to which it is entitled to the total of all such additional payments, but in no event more than the additional payment to which it is entitled.

(g) Each carrier shall transmit quarterly to the pool administrator, in forms and formats designated by the superintendent, the following data for each pooled insurance policy form within each region:

(1) the average demographic factor, computed in accordance with subdivision (c) of this section, as of the first day of the following quarter;

(2) the annualized premium as of the first day of the following quarter; and

(3) premium earned during the quarter, identifying separately the earned premium charged for anticipated payments to the demographic pooling fund.

Such reports shall be due to the pool administrator no later than 30 days after the end of each calendar quarter, beginning with the second quarter of 1993. In addition, each carrier shall transmit to the pool administrator by May 30, 1993, the data stated in paragraphs (1) and (2) of this subdivision, computed as of April 1, 1993.

(h) In May 1994 and each May thereafter, a carrier's initial payments to or from a demographic pooling fund as described in subdivisions (e) and (f) of this section shall be reconciled with payments determined pursuant to this paragraph.

(1) A carrier's final average demographic factor shall be determined based on actual demographic data as reported as of the beginning of each quarter pursuant to subdivision (g) of this section and incurred claims as prepared for and consistent with the carrier's annual statement for the preceding calendar year. The average demographic factor of each carrier during the previous calendar year is calculated as the average of its average demographic factors as of the beginning of each calendar quarter of the previous calendar year, weighted by its total annualized premium as of each calculation date. Similarly, the regional demographic factor during the previous calendar year is calculated as the average of the regional demographic factors for that pool as of the beginning of each calendar quarter of the previous calendar year, weighted by the total annualized premium of all carriers participating in the pool as of the calculation date.

(2) For reconciliation purposes, a carrier's total payment to () or from (+) the demographic pooling fund for the previous calendar year shall be determined, subject to the limitation in subdivision (i) of this section as the product of subparagraphs (i) and (ii) of this paragraph:

(i) the claims incurred under its pooled insurance during that year, excluding amounts collected or collectible in accordance with section 361.4(c) and (d) of this Part for medical care rendered during that year or any previous year;

(ii) 1.0 minus the ratio of the regional demographic factor for that pool during that year to the carrier's average demographic factor for that pool during that year.

(3) Carriers shall pay additional amounts to, or collect additional amounts from, the demographic pooling fund so that these amounts, combined with amounts initially paid pursuant to subdivisions (e) and (f) of this section, equal the total payment to or from the demographic pooling fund for reconciliation purposes. For example, if a carrier initially made payments to the demographic pooling fund of $300,000 for 1993, but the total payment to the demographic pooling fund for reconciliation purposes is $350,000 for that period, then an additional $50,000 shall be paid by that carrier to the demographic pooling fund.

(4) The additional payment to the demographic pooling fund shall be paid by the carrier during the 12 months beginning with the next July 1st (July 1, 1994 in the example in paragraph [3] of this subdivision). That amount shall be in addition to the carrier's payments to the demographic pooling fund pursuant to subdivision (e) of this section.

(5) The additional payments from the demographic pooling fund shall be paid to the carrier in accordance with paragraph (f)(3) of this section.

(i) In order to implement the phaseout of the demographic pools that deal with individual health insurance policies and small group health insurance policies, other than Medicare supplement insurance policies, pursuant to chapter 504 of the Laws of 1995, payments to and from such demographic pools otherwise determined by subdivisions (e), (f) and (h) of this section shall be reduced by the percentages set forth below:

*Year*	*Amount of Reduction*
1997	- 321/2% reduction
1998	- 55% reduction
1999	- 771/2% reduction
2000	- 100% reduction

The aggregate savings resulting from such decreased payments to the demographic pools that deal with individual health insurance policies and small group health insurance policies, other than Medicare supplement insurance policies shall be distributed pursuant to the methodology in section 361.4 of this Part from January 1, 1997 through December 31, 1998 and pursuant to the methodology in section 361.5 of this Part after December 31, 1998.