Information for Insurers on Extension of Payment Periods for Health Insurance Premiums

Pursuant to Executive Order No. 202.14, the Department of Financial Services (DFS) promulgated the Fifty-Ninth Amendment to 11 NYCRR 52 as an emergency regulation on April 7, 2020.  This regulation provides relief to a policyholder or contract holder who demonstrates a financial hardship as a result of the COVID-19 pandemic by requiring insurers, HMOs, and student health plans to:

  • Extend the premium payment period to the later of the expiration of the applicable contractual grace period or 11:59 p.m. on June 1, 2020 for any individual, small group, or student blanket comprehensive health insurance policy;
  • Pay claims and not retroactively terminate the policy for non-payment of premium during that period;
  • Not impose any late fees relating to such premium payment;
  • Not report the policyholder or contract holder to a credit reporting agency or debt collection agency with respect to such premium payment;  and
  • Provide information to the policyholder or contract holder regarding alternate policies available from the insurer, HMO, or student health plan and provide contact information for the NY State of Health.

Additionally, the regulation requires insurers, HMOs, and student health plans to, within ten business days following the promulgation of the regulation:

  • Mail or deliver, including by e-mail, written notice to every individual, small group, and student blanket comprehensive health insurance policyholder and contract holder of the provisions of the regulation, and a toll-free number that the policyholder or contract holder may call to discuss billing and make alternative payment arrangements; and
  • Notify insurance producers and any third-party administrators with whom or which the insurer does business of the provisions of the regulation.

A model notice that insurers may use as a template to provide notice to policyholders or contract holders is available here.  The foregoing obligations of insurers, HMOs and student health plans under the regulation are subject to consideration by the Superintendent of their liquidity and solvency.

The regulation also requires a licensed insurance producer who procured the individual, small group, or student blanket comprehensive health insurance policy for the policyholder or contract holder to mail or deliver, including by e-mail, notice to the policyholder or contract holder of the provisions of the regulation within ten business days following the promulgation of the regulation. A model notice that producers may use as a template to provide notice to policyholders or contract holders is available here.

The regulation also provides that:

  • The insurer, HMO, or student health plan shall accept a written attestation from an individual, small group, or student blanket comprehensive policyholder or contract holder as proof of financial hardship as a result of the COVID-19 pandemic;
  • An individual, small group, or student blanket comprehensive health insurance policyholder or contract holder may still voluntarily cancel a health insurance policy;
  • The period to pay insurance premiums set forth in the Executive Order and the regulation does not constitute a waiver or forgiveness of the premium;
  • The period set forth in the Executive Order and the regulation applies only to terminations attributed to a failure by an individual, small group, or student blanket comprehensive health insurance policyholder or contract holder to pay premiums during such period;
  • If an insurer, HMO, or student health plan terminates a policy for any other reason permitted by law, the insurer, HMO, or student health plan must comply with statutory notice requirements; and
  • The regulation applies to any child health insurance plan policy where the policyholder or contract holder pays the entire premium.

DFS has received inquiries from insurers about the Executive Order and regulation.  This Q and A provides responses to these inquiries.

 
 
Q-1. Which insurers does the regulation apply to?
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The regulation applies to insurers, Article 43 corporation, HMOs (including PHSPs to the extent that they offer coverage in the individual and small group health insurance market or in the Child Health Plus program), and student health plans with a certificate of authority pursuant to Insurance Law section 1124.

Q-2. What types of accident and health coverage does the regulation apply to?
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The regulation applies to individual and small group comprehensive health insurance. It applies to comprehensive student blanket health insurance issued pursuant to Insurance Law section 3240. The regulation also applies to Child Health Plus when the contract holder is responsible for the full premium amount.

Q-3. Does the regulation apply to individuals enrolled in a qualified health plan who receive advance premium tax credits (APTC)?
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APTC plans have additional flexibility.  Insurers should follow the guidance posted by the NY State of Health for individuals receiving advance premium tax credits. 

Q-4. Does the regulation apply to the Essential Plan and Medicaid Managed Care Plans?
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No.  The regulation does not apply to the Essential Plan or Medicaid Managed Care Plans.  Insurers should follow the applicable guidance posted by the NY State of Health.

Q-5. Does the regulation apply to Medicare plans (including Medicare Advantage)?
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No.  The regulation does not apply to Medicare plans (including Medicare Advantage).  Insurers should consult the Centers for Medicare and Medicaid Services for applicable rules.

Q-6. Does the extension of premium payment period apply to individuals and small groups that have not paid their March premium?
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Yes, so long as the policyholder or contract holder was not terminated before April 7, 2020.

Q-7. If a policyholder or contract holder experiencing a hardship has not paid outstanding premiums by June 2, can they be terminated as of that date?
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Yes, if the policyholder or contract holder is not otherwise entitled to a contractual grace period at that time.

Example A:  Bob demonstrated that he experienced a financial hardship and failed to pay his premiums due on April 15 within his 30-day grace period.  As of June 2, Bob still had not paid his premiums due April 15.  Bob may be terminated on June 2 for failure to pay premiums.

Example B:  Sally was current on her premiums until she experienced financial hardship and was not able to pay her premium due May 15.  Sally has a 30-day grace period.  Sally demonstrated a financial hardship to her insurer.  As of June 2, Sally has still not paid her premium.  Sally cannot be terminated on June 2 because she is still within her 30-day grace period.

Although an insurer may be entitled to terminate a policyholder or contract holder that has not paid outstanding premiums by June 2, prior to initiating any termination, insurers should make every effort possible to work with policyholders or contract holders experiencing a financial hardship to make accommodations for alternative payment arrangements or to assist the policyholder or contract holder in finding new coverage.

Q-8. Is an insurer responsible for paying claims incurred during this period prior to a policyholder’s or contract holder’s termination even if the policyholder or contract holder failed to pay premiums for this period?
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Yes. The regulation prohibits retroactive termination of the policy or contract and provides that the insurer is responsible for paying claims that would otherwise be payable for the period covered by the regulation.

Q-9. What if a policyholder or contract holder does not request an extension and has not paid the premium?
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The provisions of the regulation apply to a policyholder or contract holder who demonstrates a financial hardship due to COVID-19.  The regulation provides that the insurer shall accept a written attestation from the policyholder or contract holder as proof of financial hardship as a result of the COVID-19 pandemic.  If the policyholder or contract holder has not provided a written attestation of financial hardship due to the COVID-19 pandemic, the terms of the policy or contract, including any grace period therein, would apply.  However, insurers should make every effort possible to assist the policyholder or contract holder in finding new coverage.

Q-10. What constitutes a written attestation sufficient to demonstrate financial hardship under the regulation?
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A statement, submitted by mail or e-mail, by a policyholder or contract holder that they are suffering a financial hardship due to the COVID-19 pandemic is sufficient.

Q-11. When are the outstanding premiums expected to be paid in full?
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During the COVID-19 pandemic, insurers should make every effort possible to work with policyholders and contract holders experiencing a financial hardship to make accommodations for alternative payment arrangements.

Q-12. What else should an insurer do if a policyholder or contract holder has difficulty paying their premiums?
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The regulation requires insurers to provide information regarding alternate coverage available from the insurer and to provide contact information for the NY State of Health.

Q-13. Does the regulation apply to individuals who are on COBRA?
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No. The regulation only applies to policyholders and contract holders.  An individual covered under COBRA pays their premiums to the policyholder or contract holder and remains covered under the policyholder’s or contract holder’s group policy or contract.  If an insurer is aware that an individual covered under COBRA is having difficulty paying premiums, the insurer should provide information regarding alternate coverage available from the insurer and to provide contact information for the NY State of Health.

Q-14. What does the regulation require licensed insurance producers to do?
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The regulation provides that a licensed insurance producer who procured the individual, small group, or student blanket comprehensive health insurance policy for the policyholder or contract holder shall mail or deliver, including by e-mail, notice to the policyholder or contract holder of the provisions of the regulation within ten business days following the promulgation of the regulation.  For the duration of the current state of emergency, producers may comply with the notice obligations by e-mailing the notice to the policyholders and contract holders for which the producers have email addresses, regardless of whether the policyholders and contract holders have consented to receiving notice via email, post the notice to their website (if they have a website), and disseminate the notice by other means, such as social media, if feasible.

A model notice that producers may use as a template to provide notice to policyholders or contract holders is available here.

 
Q-15. How should a health insurer that experiences a delay in premium collection as a result of the regulation treat the timing of the receivable for statutory accounting purposes?
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Premiums that are owed, but not more than 90 days past due, are recognized as admitted assets for statutory accounting purposes. The regulation permits the premium due date to be extended until June 1, 2020 for policyholders or contract holders who demonstrate financial hardship as a result of the COVID-19 pandemic. The new due date for the payment of such premiums serves as the new start date for counting the 90 days for admitted asset purposes.