New York Laws
Article 11 - Licensing of Insurers
1124 - Institutions of Higher Education Exempt; Certificate of Authority.

(1) "Qualified actuary" means an actuary who is a member in good
standing of the American Academy of Actuaries or Society of Actuaries,
with experience in establishing rates for self-insured trusts providing
health benefits or other similar experience.
(2) "Institution of higher education" or "institution" means an
educational institution in this state that:
(A) admits as regular students only persons having a certificate of
graduation from a school providing secondary education, or the
recognized equivalent of such a certificate, or persons who have
completed a secondary school education in a home school setting that is
treated as a home school or private school under the laws of this state;
(B) is legally authorized within this state to provide a program of
education beyond secondary education;
(C) provides an educational program for which the institution awards a
bachelor's degree, graduate degree, or professional degree;
(D) is a public or other nonprofit institution;
(E) is accredited by a nationally recognized accrediting agency or
association;
(F) is governed by the board of regents of this state; and
(G) maintains an endowment of at least one billion dollars.
(3) "Student" means a person enrolled in an institution of higher
education and may include a postdoctoral fellow.
(4) "Student contract" means evidence of coverage furnished to a
student that sets forth all benefits and terms and conditions, with
regard to a student health plan.
(5) "Student health plan" or "plan" means any self-funded plan
established or maintained by an institution of higher education for the
purpose of providing medical, surgical, or hospital services to a
student, the student's spouse or domestic partner, the student's child
or children, or other persons chiefly dependent upon the student for
support and maintenance.
(b) An institution of higher education shall not establish, maintain,
or otherwise participate in a student health plan in this state unless
the institution obtains and maintains a certificate of authority from
the superintendent pursuant to the provisions of this section.
(c) Except as otherwise provided in this section or a regulation
promulgated by the superintendent, an institution providing a plan
shall:
(1) be subject to all consumer protection laws applicable to
corporations organized under article forty-three of this chapter,
including minimum requirements of article forty-three of this chapter
and regulations thereunder regarding benefits, contracts, and rates; and
(2) provide that its plan will have an expected loss ratio of not less
than eighty-two percent. In reviewing a rate filing or application by a
plan, the superintendent may modify the eighty-two percent expected
minimum loss ratio requirement if the superintendent determines the
modification to be in the interests of the people of this state or if
the superintendent determines that a modification is necessary to
maintain plan solvency. No later than one hundred twenty days after the
close of a plan's fiscal year, a plan shall annually report the actual
loss ratio for the previous plan fiscal year in a format acceptable to
the superintendent. If the expected loss ratio is not met, the
superintendent may direct the plan to take corrective action. Mandatory
uniform student administrative health fees paid by the students
irrespective of whether the student is a plan member to an institution

shall not be deemed to be included in the premiums paid by students for
health benefit coverage under a plan.
(d) An institution shall file an application for a certificate of
authority on such form as the superintendent may prescribe, and shall
provide to the satisfaction of the superintendent the following:
(1) a copy of the student contract, including a table of the premium
rates charged or proposed to be charged;
(2) a report indicating the benefit provisions, premium rates, and
incurred medical losses associated with the institution's students under
the insurance policy or contract insuring the institution's students,
for the three years prior to the date of the application;
(3) the most recent certified independently-audited financial
statement for the institution;
(4) a report prepared by a qualified actuary that supports the
proposed premiums for the plan;
(5) a copy of all agreements between the institution and any plan
administrator, with regard to the student health plan;
(6) a pro-forma balance sheet, including actuarially determined claims
liabilities, and statement of revenue and expenses, including reasonably
projected expenses, medical losses, and premiums to be charged to
students for the plan during the first three years;
(7) a narrative description of the:
(A) accounting methodology that the institution will utilize,
including a description of the separate accounts for revenues and
expenses, including medical and hospital expenses and administration
expenses, reserves for claims and expenses thereon, including
incurred-but-not-reported, unearned premium reserves, contingent
reserves, and any asset accounts (cash, premiums receivable,
investments) relevant to the plan. The accounts may be established
within the institution's general accounting ledger system, provided the
general ledger accounts are clearly identifiable as pertaining to the
plan, including any such accounts allocated to the plan;
(B) billing and claim payment procedures, including the names and
contact information for those persons charged with handling accounting
and claims issues; and
(C) any compensation the institution will receive in connection with
the plan.
(8) copy of any stop-loss insurance policy issued or proposed to be
issued by an insurer authorized to do the business of accident and
health insurance in this state or is a health service corporation
organized under article forty-three of this chapter; and
(9) such other information as the superintendent may require.
(e) Upon compliance with this section, the superintendent may issue a
certificate of authority to an applicant. Every certificate of authority
shall contain the name of the certified entity and its home office
address. The superintendent shall refuse to grant a certificate of
authority to an applicant that fails to meet the requirements of this
section. The superintendent may refuse to issue any certificate of
authority if in the superintendent's judgment, the refusal will best
promote the interests of the people of this state.
Notice of refusal shall be in writing and shall set forth the basis for
refusal. If the applicant submits a written request within thirty days
after receipt of the notice of refusal, then the superintendent shall
conduct a hearing to give the applicant the opportunity to show cause
why the refusal should not be made final.
(f) In order to obtain and maintain a certificate of authority, an
institution shall:
(1) file a complete application with the superintendent in accordance
with subsection (d) of this section;
(2) have within its own organization adequate resources and competent
personnel to administer the student health plan or, in order to provide
such administrative services, in whole or part, has contracted with a
person or entity to serve as a plan administrator, determined by the
institution to be qualified based upon written documentation furnished
to the institution, provided that the documentation shall be made
available to the superintendent upon request;
(3) establish and maintain premium rates sufficient to meet its
contractual obligations and to satisfy the reserve requirements set
forth in subsection (h) of this section;
(4) establish and maintain a fair and equitable process for claims
review, dispute resolution, and appeal procedures, including arbitration
of rejected claims, and procedures for handling claims for benefits in
the event of plan dissolution, that are satisfactory to the
superintendent and are subject to article forty-nine of this chapter;
(5) provide covered students with a student contract; and
(6) file all plan documents, including the summary plan description,
and any amendments thereto, with the superintendent and receive the
superintendent's approval in accordance with this section.
(g) An institution that has received a certificate of authority shall
file with the superintendent, for the superintendent's prior approval,
any amendments to the student contract, student health plan, or premium
rates charged for the plan.
(h)(1) An institution shall establish reserves with the amounts
necessary to satisfy all contractual obligations and liabilities of the
plan, including: (A) a reserve for payment of claims and expenses
thereon reported but not yet paid, and claims and expenses thereon
incurred but not yet reported, which shall not be less than an amount
equal to twenty-five percent of expected incurred claims and expenses
thereon for the current plan year, unless a qualified actuary has
demonstrated to the superintendent's satisfaction that a lesser amount
shall be adequate; (B) a reserve for unearned premium equivalents,
computed pro-rata on the basis of the unexpired portion of the policy
period; and (C) a contingent reserve fund, established and maintained
for the sole purpose of satisfying unexpected obligations of the plan in
the event of termination of the plan, which shall not be less than five
percent of the annualized earned premium equivalents during the current
fiscal year of the plan.
(2) A qualified actuary may demonstrate that a lesser amount of a
reserve for payment of claims and expenses thereon reported but not yet
paid, and claims and expenses thereon incurred-but-not-yet-reported,
shall be adequate by showing that the institution has obtained a medical
stop-loss insurance policy issued by an insurer authorized by the
superintendent to do the business of accident and health insurance in
this state or is a health service corporation organized under article
forty-three of this chapter. If at any time the reserve funds required
to be established pursuant to this section fall below the required
minimum amounts, then the institution shall immediately notify the
superintendent of such impairment. The institution shall cure the
impairment within five business days.
(3) The assets constituting the student health plan's contingent
reserve fund shall consist solely of certificates of deposit issued by a
United States bank and payable in United States legal tender, or
securities representing investments of the types specified in paragraphs
one, two, three, eight, and ten of subsection (a) of section one
thousand four hundred four of this chapter, or as otherwise expressly

permitted by the superintendent. Any interest earned or capital gain
realized on the money so deposited or invested shall accrue to and
become part of the plan's reserve funds or contingent reserve, as
applicable.
(4) The plan's assets, liabilities, income and expenses shall be
accounted for separate and apart from all other assets, liabilities,
income and expenses of the university. The accounting for the plan's
contingent reserve fund shall show: (A) the purpose, source, date and
amount of each sum paid into the fund; (B) the interest earned by such
fund; (C) capital gains or losses resulting from the sale of investments
of the plan's contingent reserve fund; (D) the order, purpose, date and
amount of each payment from the contingent reserve fund; and (E) the
assets of the contingent reserve fund, indicating cash balance and
schedule of investments.
(5) The requirements for funding of the plan's reserves shall be
calculated using generally accepted accounting principles. Only those
expenses that relate to the plan shall be included in calculating the
requirements for funding of the plan's reserve funds. Expenses allocated
to the plan shall be allocated on an equitable basis in conformity with
generally accepted accounting principles consistently applied. The
books, accounts, and records of the plan shall be maintained as to
clearly and accurately disclose the nature and details of all expenses
so as to support the reasonableness of such expenses.
(i)(1) An institution of higher education shall file with the
superintendent within one hundred twenty days of the close of the plan's
fiscal year a report that contains:
(A) an annual financial statement, verified by the oath of at least
two of the institution's principal officers, with direct knowledge of
the operations of the student health plan, showing the financial
condition of the plan during the most recent fiscal year, in accordance
with law and generally accepted accounting principles, in a form
prescribed by the superintendent;
(B) the identity of the qualified actuary utilized by the institution
or plan and the amount paid to the qualified actuary by the institution
or plan during its most recent fiscal year;
(C) the identities of the plan's ten largest vendors by payment amount
during its most recent fiscal year;
(D) the name and contact information of the person or entity appointed
by the institution to administer the student health plan;
(E) a pro-forma statement of projected revenue and expenses for health
benefits anticipated by the plan for the next twelve-month period of the
plan's operation, provided on a fiscal year;
(F) a detailed report of the operations and condition of the plan's
reserve funds; and
(G) such other information as the superintendent may require.
(2) An institution of higher education shall file with the
superintendent within one hundred twenty days of the close of its
student health plan's fiscal year the most recent certified,
independently audited financial statement for the institution. The
statement shall include an opinion of an independent certified public
accountant. The notes to the financial statement shall show the
financial results of the student health plan operations and a
description as to how the institution meets the reserve requirements in
paragraph one of subsection (h) of this section, including the amounts
reported for each of the reserves, the method used to calculate the
reserves, and the change in the reserves from the beginning of the
plan's fiscal year to the end of the plan's fiscal year. In addition,
the notes to financial statement shall detail the assets comprising the

contingent reserve fund to demonstrate compliance with paragraph one of
subsection (h) of this section.
(3) An institution that fails to file any report or statement required
by this chapter, or fails to reply within thirty days to a written
inquiry by the superintendent in connection therewith shall, in addition
to other penalties provided by this chapter, be subject, upon due notice
and opportunity to be heard, to a penalty of up to one thousand dollars
per day of delay, not to exceed twenty-five thousand dollars in the
aggregate, for each such failure.
(j) The superintendent may, pursuant to section three hundred nine,
three hundred ten, three hundred eleven, and three hundred twelve of
this chapter, and pursuant to the financial services law, make an
examination into the affairs of any institution, with regard to a
student health plan issued by the institution, as often as the
superintendent deems it expedient for the protection of the interests of
the people of this state. The expenses of every examination of the
affairs of an institution, with regard to a student health plan
established or maintained by the institution, shall be borne and paid by
the institution so examined. The expenses of examination shall include
reimbursement for the compensation paid for the services of persons
employed by the superintendent or by the superintendent's authority to
make such examination, and for the necessary traveling and living
expenses of the person or persons making the examination.
(k)(1) The superintendent may suspend or revoke a certificate of
authority issued to an institution if the superintendent finds, after
notice and hearing, that the institution has failed to comply with any
requirement imposed on it by the provisions of this chapter and if in
the superintendent's judgment such suspension or revocation is
reasonably necessary to protect the interests of the people of this
state, including:
(A) for any cause that would be a basis for denial of an initial
application for such a certificate;
(B) failure to maintain the reserves required by subsection (h) of
this section; or
(C) the superintendent finds that the institution has refused to
produce its accounts, records, and files for examination or has refused
to cooperate or give information with respect to the affairs of the
student health plan or to perform any other legal obligation relating to
such an examination when required by the superintendent.
(2) Any certificate of authority suspended or revoked under this
subsection shall be surrendered to the superintendent, and the
institution shall notify all participating students of that decision in
such form and manner as the superintendent may prescribe, but not later
than ten days after receipt of notice of the superintendent's decision
requiring suspension or revocation. In addition, the institution shall
submit a plan for the superintendent's approval for winding up the
plan's affairs in an orderly manner designed to result in timely payment
of all benefits, in such form and manner as the superintendent may
prescribe.
(3) Notwithstanding subdivision two of section eighty-seven of the
public officers law, all final decisions to suspend or revoke the
certificate of authority with regard to an institution shall be public.
(l) In any case in which an institution determines that there is a
reason to believe that the student health plan will terminate, the
institution shall so inform the superintendent at least sixty days prior
thereto, and shall file a sworn statement with the superintendent
concerning all current and future liabilities under its discontinued
plan. The institution also shall submit a plan for the superintendent's

approval for winding up the plan's affairs in an orderly manner designed
to result in timely payment of all benefits, in such form and manner as
the superintendent may prescribe.
(m)(1) Any funds of the institution, as they pertain to the student
health plan, shall be accounted for separate and apart from all other
assets, liabilities, income and expenses of the institution until all
plan benefits and other plan obligations have been satisfied. Until such
time, the institution shall continue to maintain and fund the reserve
funds required to be established under subsection (h) of this section.
If at any time the superintendent determines that additional funds shall
be deposited in the reserve funds, then the institution shall make the
deposit within five days of the superintendent's determination.
(2) If, after twenty-four months, or such longer period as deemed
necessary by the superintendent, all plan benefits and other plan
obligations have been satisfied, the institution, upon approval by the
superintendent, shall no longer be required to maintain assets within
the plan's reserve funds within accounts within the institution's
general accounting ledger system.
(n) An institution shall not issue a stop-loss insurance policy.
(o) The superintendent may promulgate such regulations as the
superintendent deems necessary to implement the provisions of this
section and to ensure that the plans established under this section are
in the best interests of the students, students' spouses, the students'
children, and other persons chiefly dependent upon the students for
support and maintenance.
(p) Except as otherwise provided in this section, any institution of
higher education that violates this section shall be subject to the
penalties set forth in section one hundred nine of this chapter.
* NB There are 2 § 1124's

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