§ 1124 — Institutions of higher education exempt; certificate of authority

* § 1124. Institutions of higher education exempt; certificate of\nauthority. (a) For the purposes of this section:\n (1) "Qualified actuary" means an actuary who is a member in good\nstanding of the American Academy of Actuaries or Society of Actuaries,\nwith experience in establishing rates for self-insured trusts providing\nhealth benefits or other similar experience.\n (2) "Institution of higher education" or "institution" means an\neducational institution in this state that:\n (A) admits as regular students only persons having a certificate of\ngraduation from a school providing secondary education, or the\nrecognized equivalent of such a certificate, or persons who have\ncompleted a secondary school education in a home school setting that is\ntreated as a home school or private school under the laws of this state;\n (B) is legally authorized within this state to provide a program of\neducation beyond secondary education;\n (C) provides an educational program for which the institution awards a\nbachelor's degree, graduate degree, or professional degree;\n (D) is a public or other nonprofit institution;\n (E) is accredited by a nationally recognized accrediting agency or\nassociation;\n (F) is governed by the board of regents of this state; and\n (G) maintains an endowment of at least one billion dollars.\n (3) "Student" means a person enrolled in an institution of higher\neducation and may include a postdoctoral fellow.\n (4) "Student contract" means evidence of coverage furnished to a\nstudent that sets forth all benefits and terms and conditions, with\nregard to a student health plan.\n (5) "Student health plan" or "plan" means any self-funded plan\nestablished or maintained by an institution of higher education for the\npurpose of providing medical, surgical, or hospital services to a\nstudent, the student's spouse or domestic partner, the student's child\nor children, or other persons chiefly dependent upon the student for\nsupport and maintenance.\n (b) An institution of higher education shall not establish, maintain,\nor otherwise participate in a student health plan in this state unless\nthe institution obtains and maintains a certificate of authority from\nthe superintendent pursuant to the provisions of this section.\n (c) Except as otherwise provided in this section or a regulation\npromulgated by the superintendent, an institution providing a plan\nshall:\n (1) be subject to all consumer protection laws applicable to\ncorporations organized under article forty-three of this chapter,\nincluding minimum requirements of article forty-three of this chapter\nand regulations thereunder regarding benefits, contracts, and rates; and\n (2) provide that its plan will have an expected loss ratio of not less\nthan eighty-two percent. In reviewing a rate filing or application by a\nplan, the superintendent may modify the eighty-two percent expected\nminimum loss ratio requirement if the superintendent determines the\nmodification to be in the interests of the people of this state or if\nthe superintendent determines that a modification is necessary to\nmaintain plan solvency. No later than one hundred twenty days after the\nclose of a plan's fiscal year, a plan shall annually report the actual\nloss ratio for the previous plan fiscal year in a format acceptable to\nthe superintendent. If the expected loss ratio is not met, the\nsuperintendent may direct the plan to take corrective action. Mandatory\nuniform student administrative health fees paid by the students\nirrespective of whether the student is a plan member to an institution\nshall not be deemed to be included in the premiums paid by students for\nhealth benefit coverage under a plan.\n (d) An institution shall file an application for a certificate of\nauthority on such form as the superintendent may prescribe, and shall\nprovide to the satisfaction of the superintendent the following:\n (1) a copy of the student contract, including a table of the premium\nrates charged or proposed to be charged;\n (2) a report indicating the benefit provisions, premium rates, and\nincurred medical losses associated with the institution's students under\nthe insurance policy or contract insuring the institution's students,\nfor the three years prior to the date of the application;\n (3) the most recent certified independently-audited financial\nstatement for the institution;\n (4) a report prepared by a qualified actuary that supports the\nproposed premiums for the plan;\n (5) a copy of all agreements between the institution and any plan\nadministrator, with regard to the student health plan;\n (6) a pro-forma balance sheet, including actuarially determined claims\nliabilities, and statement of revenue and expenses, including reasonably\nprojected expenses, medical losses, and premiums to be charged to\nstudents for the plan during the first three years;\n (7) a narrative description of the:\n (A) accounting methodology that the institution will utilize,\nincluding a description of the separate accounts for revenues and\nexpenses, including medical and hospital expenses and administration\nexpenses, reserves for claims and expenses thereon, including\nincurred-but-not-reported, unearned premium reserves, contingent\nreserves, and any asset accounts (cash, premiums receivable,\ninvestments) relevant to the plan. The accounts may be established\nwithin the institution's general accounting ledger system, provided the\ngeneral ledger accounts are clearly identifiable as pertaining to the\nplan, including any such accounts allocated to the plan;\n (B) billing and claim payment procedures, including the names and\ncontact information for those persons charged with handling accounting\nand claims issues; and\n (C) any compensation the institution will receive in connection with\nthe plan.\n (8) copy of any stop-loss insurance policy issued or proposed to be\nissued by an insurer authorized to do the business of accident and\nhealth insurance in this state or is a health service corporation\norganized under article forty-three of this chapter; and\n (9) such other information as the superintendent may require.\n (e) Upon compliance with this section, the superintendent may issue a\ncertificate of authority to an applicant. Every certificate of authority\nshall contain the name of the certified entity and its home office\naddress. The superintendent shall refuse to grant a certificate of\nauthority to an applicant that fails to meet the requirements of this\nsection. The superintendent may refuse to issue any certificate of\nauthority if in the superintendent's judgment, the refusal will best\npromote the interests of the people of this state.\nNotice of refusal shall be in writing and shall set forth the basis for\nrefusal. If the applicant submits a written request within thirty days\nafter receipt of the notice of refusal, then the superintendent shall\nconduct a hearing to give the applicant the opportunity to show cause\nwhy the refusal should not be made final.\n (f) In order to obtain and maintain a certificate of authority, an\ninstitution shall:\n (1) file a complete application with the superintendent in accordance\nwith subsection (d) of this section;\n (2) have within its own organization adequate resources and competent\npersonnel to administer the student health plan or, in order to provide\nsuch administrative services, in whole or part, has contracted with a\nperson or entity to serve as a plan administrator, determined by the\ninstitution to be qualified based upon written documentation furnished\nto the institution, provided that the documentation shall be made\navailable to the superintendent upon request;\n (3) establish and maintain premium rates sufficient to meet its\ncontractual obligations and to satisfy the reserve requirements set\nforth in subsection (h) of this section;\n (4) establish and maintain a fair and equitable process for claims\nreview, dispute resolution, and appeal procedures, including arbitration\nof rejected claims, and procedures for handling claims for benefits in\nthe event of plan dissolution, that are satisfactory to the\nsuperintendent and are subject to article forty-nine of this chapter;\n (5) provide covered students with a student contract; and\n (6) file all plan documents, including the summary plan description,\nand any amendments thereto, with the superintendent and receive the\nsuperintendent's approval in accordance with this section.\n (g) An institution that has received a certificate of authority shall\nfile with the superintendent, for the superintendent's prior approval,\nany amendments to the student contract, student health plan, or premium\nrates charged for the plan.\n (h)(1) An institution shall establish reserves with the amounts\nnecessary to satisfy all contractual obligations and liabilities of the\nplan, including: (A) a reserve for payment of claims and expenses\nthereon reported but not yet paid, and claims and expenses thereon\nincurred but not yet reported, which shall not be less than an amount\nequal to twenty-five percent of expected incurred claims and expenses\nthereon for the current plan year, unless a qualified actuary has\ndemonstrated to the superintendent's satisfaction that a lesser amount\nshall be adequate; (B) a reserve for unearned premium equivalents,\ncomputed pro-rata on the basis of the unexpired portion of the policy\nperiod; and (C) a contingent reserve fund, established and maintained\nfor the sole purpose of satisfying unexpected obligations of the plan in\nthe event of termination of the plan, which shall not be less than five\npercent of the annualized earned premium equivalents during the current\nfiscal year of the plan.\n (2) A qualified actuary may demonstrate that a lesser amount of a\nreserve for payment of claims and expenses thereon reported but not yet\npaid, and claims and expenses thereon incurred-but-not-yet-reported,\nshall be adequate by showing that the institution has obtained a medical\nstop-loss insurance policy issued by an insurer authorized by the\nsuperintendent to do the business of accident and health insurance in\nthis state or is a health service corporation organized under article\nforty-three of this chapter. If at any time the reserve funds required\nto be established pursuant to this section fall below the required\nminimum amounts, then the institution shall immediately notify the\nsuperintendent of such impairment. The institution shall cure the\nimpairment within five business days.\n (3) The assets constituting the student health plan's contingent\nreserve fund shall consist solely of certificates of deposit issued by a\nUnited States bank and payable in United States legal tender, or\nsecurities representing investments of the types specified in paragraphs\none, two, three, eight, and ten of subsection (a) of section one\nthousand four hundred four of this chapter, or as otherwise expressly\npermitted by the superintendent. Any interest earned or capital gain\nrealized on the money so deposited or invested shall accrue to and\nbecome part of the plan's reserve funds or contingent reserve, as\napplicable.\n (4) The plan's assets, liabilities, income and expenses shall be\naccounted for separate and apart from all other assets, liabilities,\nincome and expenses of the university. The accounting for the plan's\ncontingent reserve fund shall show: (A) the purpose, source, date and\namount of each sum paid into the fund; (B) the interest earned by such\nfund; (C) capital gains or losses resulting from the sale of investments\nof the plan's contingent reserve fund; (D) the order, purpose, date and\namount of each payment from the contingent reserve fund; and (E) the\nassets of the contingent reserve fund, indicating cash balance and\nschedule of investments.\n (5) The requirements for funding of the plan's reserves shall be\ncalculated using generally accepted accounting principles. Only those\nexpenses that relate to the plan shall be included in calculating the\nrequirements for funding of the plan's reserve funds. Expenses allocated\nto the plan shall be allocated on an equitable basis in conformity with\ngenerally accepted accounting principles consistently applied. The\nbooks, accounts, and records of the plan shall be maintained as to\nclearly and accurately disclose the nature and details of all expenses\nso as to support the reasonableness of such expenses.\n (i)(1) An institution of higher education shall file with the\nsuperintendent within one hundred twenty days of the close of the plan's\nfiscal year a report that contains:\n (A) an annual financial statement, verified by the oath of at least\ntwo of the institution's principal officers, with direct knowledge of\nthe operations of the student health plan, showing the financial\ncondition of the plan during the most recent fiscal year, in accordance\nwith law and generally accepted accounting principles, in a form\nprescribed by the superintendent;\n (B) the identity of the qualified actuary utilized by the institution\nor plan and the amount paid to the qualified actuary by the institution\nor plan during its most recent fiscal year;\n (C) the identities of the plan's ten largest vendors by payment amount\nduring its most recent fiscal year;\n (D) the name and contact information of the person or entity appointed\nby the institution to administer the student health plan;\n (E) a pro-forma statement of projected revenue and expenses for health\nbenefits anticipated by the plan for the next twelve-month period of the\nplan's operation, provided on a fiscal year;\n (F) a detailed report of the operations and condition of the plan's\nreserve funds; and\n (G) such other information as the superintendent may require.\n (2) An institution of higher education shall file with the\nsuperintendent within one hundred twenty days of the close of its\nstudent health plan's fiscal year the most recent certified,\nindependently audited financial statement for the institution. The\nstatement shall include an opinion of an independent certified public\naccountant. The notes to the financial statement shall show the\nfinancial results of the student health plan operations and a\ndescription as to how the institution meets the reserve requirements in\nparagraph one of subsection (h) of this section, including the amounts\nreported for each of the reserves, the method used to calculate the\nreserves, and the change in the reserves from the beginning of the\nplan's fiscal year to the end of the plan's fiscal year. In addition,\nthe notes to financial statement shall detail the assets comprising the\ncontingent reserve fund to demonstrate compliance with paragraph one of\nsubsection (h) of this section.\n (3) An institution that fails to file any report or statement required\nby this chapter, or fails to reply within thirty days to a written\ninquiry by the superintendent in connection therewith shall, in addition\nto other penalties provided by this chapter, be subject, upon due notice\nand opportunity to be heard, to a penalty of up to one thousand dollars\nper day of delay, not to exceed twenty-five thousand dollars in the\naggregate, for each such failure.\n (j) The superintendent may, pursuant to section three hundred nine,\nthree hundred ten, three hundred eleven, and three hundred twelve of\nthis chapter, and pursuant to the financial services law, make an\nexamination into the affairs of any institution, with regard to a\nstudent health plan issued by the institution, as often as the\nsuperintendent deems it expedient for the protection of the interests of\nthe people of this state. The expenses of every examination of the\naffairs of an institution, with regard to a student health plan\nestablished or maintained by the institution, shall be borne and paid by\nthe institution so examined. The expenses of examination shall include\nreimbursement for the compensation paid for the services of persons\nemployed by the superintendent or by the superintendent's authority to\nmake such examination, and for the necessary traveling and living\nexpenses of the person or persons making the examination.\n (k)(1) The superintendent may suspend or revoke a certificate of\nauthority issued to an institution if the superintendent finds, after\nnotice and hearing, that the institution has failed to comply with any\nrequirement imposed on it by the provisions of this chapter and if in\nthe superintendent's judgment such suspension or revocation is\nreasonably necessary to protect the interests of the people of this\nstate, including:\n (A) for any cause that would be a basis for denial of an initial\napplication for such a certificate;\n (B) failure to maintain the reserves required by subsection (h) of\nthis section; or\n (C) the superintendent finds that the institution has refused to\nproduce its accounts, records, and files for examination or has refused\nto cooperate or give information with respect to the affairs of the\nstudent health plan or to perform any other legal obligation relating to\nsuch an examination when required by the superintendent.\n (2) Any certificate of authority suspended or revoked under this\nsubsection shall be surrendered to the superintendent, and the\ninstitution shall notify all participating students of that decision in\nsuch form and manner as the superintendent may prescribe, but not later\nthan ten days after receipt of notice of the superintendent's decision\nrequiring suspension or revocation. In addition, the institution shall\nsubmit a plan for the superintendent's approval for winding up the\nplan's affairs in an orderly manner designed to result in timely payment\nof all benefits, in such form and manner as the superintendent may\nprescribe.\n (3) Notwithstanding subdivision two of section eighty-seven of the\npublic officers law, all final decisions to suspend or revoke the\ncertificate of authority with regard to an institution shall be public.\n (l) In any case in which an institution determines that there is a\nreason to believe that the student health plan will terminate, the\ninstitution shall so inform the superintendent at least sixty days prior\nthereto, and shall file a sworn statement with the superintendent\nconcerning all current and future liabilities under its discontinued\nplan. The institution also shall submit a plan for the superintendent's\napproval for winding up the plan's affairs in an orderly manner designed\nto result in timely payment of all benefits, in such form and manner as\nthe superintendent may prescribe.\n (m)(1) Any funds of the institution, as they pertain to the student\nhealth plan, shall be accounted for separate and apart from all other\nassets, liabilities, income and expenses of the institution until all\nplan benefits and other plan obligations have been satisfied. Until such\ntime, the institution shall continue to maintain and fund the reserve\nfunds required to be established under subsection (h) of this section.\nIf at any time the superintendent determines that additional funds shall\nbe deposited in the reserve funds, then the institution shall make the\ndeposit within five days of the superintendent's determination.\n (2) If, after twenty-four months, or such longer period as deemed\nnecessary by the superintendent, all plan benefits and other plan\nobligations have been satisfied, the institution, upon approval by the\nsuperintendent, shall no longer be required to maintain assets within\nthe plan's reserve funds within accounts within the institution's\ngeneral accounting ledger system.\n (n) An institution shall not issue a stop-loss insurance policy.\n (o) The superintendent may promulgate such regulations as the\nsuperintendent deems necessary to implement the provisions of this\nsection and to ensure that the plans established under this section are\nin the best interests of the students, students' spouses, the students'\nchildren, and other persons chiefly dependent upon the students for\nsupport and maintenance.\n (p) Except as otherwise provided in this section, any institution of\nhigher education that violates this section shall be subject to the\npenalties set forth in section one hundred nine of this chapter.\n * NB There are 2 § 1124's\n