§ 12. Subsection (c) of section four thousand two hundred thirty-five of such law, subparagraph (J) of paragraph one as added by chapter eight hundred sixty-nine of the laws of nineteen hundred eighty-four, is amended to read as follows:

(c) (1) No policy of group accident, group health or group accident and health insurance shall be delivered or issued for delivery in this alth state unless it conforms to one of the following descriptions:

(A) A policy issued to an employer or to a trustee or trustees of a fund established by an employer, which employer or trustee or trustees shall be deemed the policyholder, insuring with or without evidence of insurability satisfactory to the insurer, employees of such employer, and insuring, except as hereinafter provided, all of such employees or all of any class or classes thereof determined by conditions pertaining to the employment or a combination of such conditions and conditions pertaining to the family status of the employee, for amounts of insurance on each person insured based upon some plan which will preclude individual selection. The premium for the policy shall be paid by the policyholder, either from the employer's funds, or from funds contributed by the insured employees, or from funds contributed jointly by the employer and employees. If all or part of the premium is to be derived from_funds_contributed by the insured employees, then such policy must [cover] insure not less than [seventy-five] fifty percent of tall employees or not less than seventy-five percent of any class or classes of employees determined by conditions pertaining to the employment] such eligible employees or, if less, fifty or more of such employees.

(B) A policy issued to [the] a trustee or trustees of a fund established by, or participated in, by the employer members of a trade association, which trustees shall be deemed the policyholder, for the sole benefit of the employees of such employers, the policy must conform subject to the following requirements:

(i) The policy may be issued only if: (I) the association has been in existence for at least [five] two years and was formed for purposes principally other than obtaining insurance, and

(II) the participating employers, meaning such employer members whose employees are to be insured, constitute at date of issue at least fifty percent of the total employers eligible to participate, unless the total number of persons covered at date of issue exceeds six hundred, in which event such participating employers must constitute at least twenty-five percent of such total employers, in either case omitting from consideration any employer whose employees are already insured under a similar group accident and health insurance policy.

(ii) The persons eligible for insurance under the policy shall be all of the employees of the participating employers, or all of any class or classes thereof determined by conditions pertaining to their employment. (iii) The premium for the policy shall be paid by the trustee or trustees either from funds contributed by the employers or by the employees; or funds contributed jointly by the employers and the employees. [A policy on which part of the premium so payable is to be derived from funds contributed by the insured employees may be placed in force only if it insures at least seventy-five percent of the then eligible employees of each participating employer. A policy on which no part of the premium so payable is to be derived from funds contributed by the insured employees must insure all eligible employees.

(iv) The policy must cover at least [one hundred] fifty employees at date of issue.

(v) The amounts of insurance under the policy must be based upon some plan precluding individual selection either by the employees or policyholder or the employer.

by the (C) A policy issued to [an association of employees, including] a labor union, which [association has a constitution and by-laws and is organized and maintained in good faith for purposes other than that of obtaining insurance, and has been so organized and maintained for a period of not less than two years prior to the issuance of such policy insuring not less than twenty-five in number and not less than seventyfive percent of all the members of such association] shall be deemed the policyholder, insuring, with or without evidence of insurability satisfactory to the insurer, members of such union and insuring, except as hereinafter provided all of such members or of any class or classes thereof determined by conditions pertaining to their employment or membership in the [association] union or both; and if membership

such

1

association is confined to employees of one employer, its affiliates or subsidiaries, the policy may not be issued to such association unless the qualifications for membership are] for amounts of insurance on each person insured based on a plan precluding individual selection, and not than [seventy-five] fifty percent of all [employees] eligible [for membership in such association] union or, if less, fifty or more of such eligible members are insured.

(D) A policy issued to [the] a trustee or trustees of a fund established, or participated in, by two or more employers in the same industry or by one or more labor unions, or by one or more employers and one or more labor unions, which trustee or trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions for the benefit of persons other than the employers or the unions, subject to the following requirements:

(i) The persons eligible for insurance shall be all of the employees of the employers or all of the members of the unions, or all of any class or classes thereof determined by conditions pertaining to their employment, or to membership in the unions, or to both.

ii) The premium for the policy shall be paid by the trustee or trustees either wholly from funds contributed by the employer or employers of the insured person or by the union or unions, or by both, or jointly from such funds and funds contributed by the insured persons specifically for their insurance or from contributions by the insured persons. A policy on which all or part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance may be placed in force only if it insures not less than [seventy-five] fifty percent of the then eligible persons, or, if less, fifty or more of such eligible persons excluding any as to whom evidence of individual insurability is not satisfactory to the insurer. A policy on which no part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance must insure all eligible persons, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer.

(iii) The policy shall insure at least [twenty-five employees or members] fifty persons at date of issue, except that if part of the premium is to be derived from funds to be contributed by the insured persons specifically for their insurance the policy shall insure at least one hundred employees or members at date of issue.

(iv) The amounts of insurance under the policy shall be based upon some plan precluding individual selection either by the insured persons or by the policyholders, employers, or unions.

(v) With respect to a policy issued to [the] a trustee or trustees of a fund established by one or more labor unions, or by one or more employers and one or more labor unions the proposed insured must submit, and the insurer must obtain, a written certification that a reasonable number of comparative bids have been obtained from different insurers and that such bids have been considered by the trustees before making a decision concerning which bid to accept. Such decision must be made at a trustees' meeting held on a date certain, and a copy of the minutes of such meeting must be attached to such certification.

in

(E) A policy issued to a creditor, vendor, (including the parent holding company of such creditor or vendor), trustee, trustees or agent suring a group of debtors or vendees, all as defined and set forth in paragraph three of subsection (b) of section four thousand two hundred sixteen of this article and under the same conditions and limitations and subject to the definitions as specified therein; provided, however, that the amount of indemnity payable with respect to any person insured thereunder shall not at any time exceed:

(i) in all cases except as hereinafter provided the lesser of thirty thousand dollars and the amount of unpaid indebtedness due from or the amount of the purchase price unpaid by such person;

(ii) in the case of a loan commitment pursuant to a program for defraying the cost of attendance of a student at a college or university or at an elementary or secondary school providing education required for minors as described in said paragraph, the lesser of thirty thousand dollars and the total of the unpaid balance of the scheduled periodic payments whether due or not due and the amount of any outstanding loan commitment pursuant to such a program; or

EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

(iii) in the case of a transaction secured by a real estate mortgage, the lesser of the sum of seventy-five thousand dollars and the amount of the indebtedness so secured.

(F) A policy issued to a social services district pursuant to section three hundred sixty-seven-a of the social services law.

(G) A policy issued to the state of New York insuring, with or without evidence of individual insurability satisfactory to the insurer, persons who are managerial or confidential employees, or retired managerial or confidential employees, of governments or public employers for the purposes of article fourteen of the civil service law. The state shall be deemed to be the policyholder. With respect to its employees, the state and each other participating government or public employer shall be deemed to be the employer. The premiums on such policy may be paid by the employer, by the employees, or by the employer and employees jointly. If the premiums are derived from funds contributed wholly by the employer, the policy must insure all eligible employees. If all or part of the premium is to be derived from funds contributed by insured employees, then such policy must insure not less than forty percent of such employees, the calculation being with respect to each employer individually. The amounts of insurance may be based upon a plan which permits a limited number of selections by the employees. The provisions of subsections (d), (h), (i) and (j) hereof shall not apply to a policy issued pursuant to this subparagraph.

(H) A policy issued to an association, or to [the] a trustee or trustees of a fund established, created or maintained for the benefit of members of one or more associations, all of whose eligible members have the same profession, trade or occupation, which association or associations have been organized and maintained in good faith for purposes principally other than that of obtaining_insurance and have been in active existence for at least two years. The policy shall insure members, or employees of members, of such association or associations for the benefit of persons other than employers and the association or associations, or any officials, representatives, trustees or agents thereof and shall provide for the issuance of a certificate to the persons insured or such beneficiary as evidence of such insurance. The members or employees eligible for the insurance under the policy shall be all the members, or all the members and their employees, or all of any class or classes thereof determined by conditions pertaining to their employment or to association membership or both. The premiums for the policy shall be paid from association or members' funds, or partly from such funds and partly from funds contributed by the insured individuals, or from funds wholly contributed by the insured individuals. A policy on which all or part of the premium is to be derived from funds contributed by the insured individuals specifically for their insurance must insure at least [seventy-five] fifty percent of the then eligible individuals or a minimum of [four] two hundred individuals, whichever is less, excluding any as to whom evidence of individual insurability is not satisfactory to the insurer. A policy on which no part of the premium is to be derived from funds contributed by the insured individuals specifically for their insurance must cover all eligible individuals, excluding any as to whom evidence of individual insurability is not satisfactory the insurer. In every case the policy must cover at least one hundred individuals at date of issue. The amounts of insurance on employees insured under the policy shall be based upon some plan precluding individual selection. If a policy dividend is declared or a reduction in rate is made under such a policy, the excess, if any, of the aggregate dividends or rate reductions under the policy over the aggregate expenditure for insurance under such policy made from association or employer funds, including expenditures made in connection with administration of such policy, shall be applied by the policyholder for the sole benefit of the insured individuals. A policy issued pursuant to this subparagraph shall provide a conversion privilege no less favorable than that provided for in subsection (e) of section three thousand two hundred twenty-one of this chapter.

to

(I) A policy insuring persons employed under 32 U. S. C. § 709, members of the national guard on full-time training duty under title 32 of the United States Code, or on active duty or active duty for training under title 10 of the United States Code, under the full-time manning program, issued to the chief of staff to the governor, who shall be deemed the policyholder, or to a trustee or trustees of a fund established, created, or maintained for the benefit of such individuals insured, which trustee or trustees shall be deemed the policyholder, the premium

of which is to be paid by the individuals insured either directly or by deduction from wages or salary. The policy must insure at least [seventy-five] fifty percent or four hundred of the individuals eligible for such insurance, whichever is less. Such policy shall provide for the payment of benefits, to the individual insured or to some beneficiary or beneficiaries other than to the aforesaid trustees or the chief of staff to the governor. The policy shall also provide for the issuance of a certificate of insurance to the individual insured or to such beneficiary, as evidence of such insurance.

(J) Under a policy issued by an insurer to a trustee or to the trustees of a trust, established or adopted by two or more individuals who are entitled to a right of conversion, pursuant to paragraph one of subsection (e) of section three thousand two hundred twenty-one of this chapter or under the terms of a contract covering residents of New York, which trustee or trustees shall be deemed to be the policyholder, to insure such individuals, subject to the following requirements:

(i) The policy must cover at least twenty-five indivíduals during the first policy year.

(ii) The benefits provided under the policy shall be those required by subsection (f), (g) or (h) of section three thousand two hundred twentyone of this chapter.

(iii) In lieu of the coverage requirements of subsections (k) and (1) of section three thousand two hundred twenty-one of this chapter and paragraph four of subsection (f) of this section, the coverage requirements of paragraphs one through ten of subsection (i) of section three thousand two hundred sixteen of this chapter shall be applicable to such policy.

(iv) If a policy dividend is declared or a reduction in rate is made under such a policy, it shall be applied by the policyholder for the sole benefit of the insured individuals.

(2) For the purpose of complying with the participation requirements prescribed in subparagraphs (A), (B), (C), (D) and (G) of paragraph one of this subsection, the provisions of this subsection are to be construed as permitting the issuance of more than one policy or contract when offered as alternatives to the eligible employees or members.

§ 13. Paragraph one of subsection (c) of section four thousand two hundred thirty-five of such law is amended by adding three new subparagraphs (K), (L) and (M) to read as follows:

(K) A policy issued to an association or the trustee or trustees of a trust established, or participated in, by one or more associations, to insure association members, subject to the following:

(1) Each association shall have:

(1)

issue;

A minimum of two hundred insured members at the policy's date of (II) Been organized and maintained in good faith for purposes principally other than that of obtaining insurance;

(III) Been in active existence for at least two years; and (IV) A_constitution and by-laws which provide that:

(aa) The association hold regular meetings not less than annually to further the purposes of the association;

(bb) The association collect dues or solicit contributions from members; and

(cc) The members have voting privileges and representation on the governing board and committees.

or

The premium for the policy shall be paid by the association or the trustees either wholly from funds contributed by the association by the insured individuals, or from funds contributed jointly by the association and insured individuals. A policy on which no part of the premium is to be derived from funds contributed by the insured individuals specifically for their insurance must insure all eligible individuals excluding any as to whom evidence of individual insurability is not satisfactory to the insurer.

(iii) The amount of insurance under the policy shall be based upon some plan precluding individual selection either by the insured members or by the association. However, with respect to an association, such a plan may permit a number of selections by the association if the selections offered utilize consistent plans of insurance so that the resulting plans of coverage are reasonable. Furthermore, such a plan may permit a limited number of selections by insured members if the selections EXPLANATION-Matter in italics is new; matter in brackets [ ] is old law

offered utilize consistent plans of insurance for individual group members so that the resulting plans of coverage are reasonable.

to

(iv) Except as provided in subsection (e) of this section, such policy shall provide for the payment of benefits to the person insured or some beneficiary or beneficiaries other than the association or any officials, representatives, trustees or agents thereof and shall provide for the issuance of a certificate to the association for delivery to the member or such beneficiary, as evidence of such insurance.

(v) The premiums charged must be reasonable in relation to the benefits provided.

(L) A policy issued to any organization, or the trustee or trustees of a trust established, or participated in, by one or more of such organizations, to insure certain persons subject to the following:

(1) The organization must be:

(1) A bank, retailer or other issuer of a credit card, charge card or payment card which can be used to buy goods or services, and the policy must insure holders of that card;

(II) A bank, savings and loan association, credit union, mutual fund, money market fund, stockbroker or other similar financial institution regulated by state or federal law, and the policy must insure the depositors, account holders or members of that institution.

or

(ii) Except for a credit union where the premium shall be paid entirely from funds contributed by the credit union, the organization organizations shall have a minimum of two hundred insured persons at the policy's date of issue.

by

(iii) The premium for the policy shall be paid by the organization or trustees either wholly from funds contributed by the organization or the insured individuals, or from funds contributed jointly by the organization and insured individuals. A policy on which no part of the premium is to be derived from funds contributed by the insured individuals specifically for their insurance must cover all eligible individuals excluding any as to whom evidence of individual insurability is not satisfactory to the insurer.

(iv) The amounts of insurance under the policy shall be based upon some plan precluding individual selection either by the insured persons or by the organization. However, with respect to an organization, such a plan may permit a number of selections by the organization if the selections offered utilize consistent plans of insurance so that the resulting plans of coverage are reasonable. Furthermore, such a plan may permit a limited number of selections by members if the selections offered utilize consistent plans of grading the amounts of insurance for individual group members SO that the resulting plans of coverage are reasonable.

(v) Except as provided in subsection (e) of this section, such policy shall provide for the payment of benefits to the person insured or to some beneficiary or beneficiaries other than the organization, or any officials, representatives, trustees or agents thereof, and shall provide for the issuance of a certificate to the persons insured or such beneficiary, as evidence of such insurance.

(vi) The premium charged must be reasonable in relation to the benefits provided.

(M) A policy issued to insure any other group approved by the superintendent upon a finding that: (i) there is a common enterprise or economic or social affinity or relationship; (ii) the premiums charged are reasonable in relation to the benefits provided; and (iii) the issuance of the policy would result in economies of acquisition or administration, would be actuarially_sound, and would not be contrary to the best interest of the public. The superintendent shall promulgate regulations setting forth any such groups that have been accepted as qualifying pursuant to this subparagraph.

§ 14. Subsection (c) of section four thousand two hundred thirty-five of such law is amended by adding a new paragraph three to read follows:

as

on

(3) (A) Any dividend hereafter apportioned on any participating group insurance policy, or any rate reduction hereafter made or continued any non-participating group policy for the first or any subsequent year of insurance under any such policy heretofore or hereafter issued under subparagraph (K), (L) or (M) of paragraph one of this subsection, may be applied to reduce the policyholder's part of the cost of such policy, except that the excess, if any, of the insured's aggregate contribution under the policy over the net cost (gross premium less dividends or rate reductions) of the insurance shall be applied at the discretion of the