Tag Archives: fine

CIGNA NY Fined $2,000,000 by Insurance Department

DFS SUPERINTENDENT VULLO ANNOUNCES $2 MILLION FINE AGAINST CIGNA FOR VIOLATIONS OF NEW YORK INSURANCE LAW

DFS Investigation Discovered That Cigna Illegally Sold Stop-Loss and Fully Insured Health Insurance Policies Outside of New York to New York-Based Small Groups

Cigna Cherry-Picked Risks, Undermining the Integrity of New York’s Health Insurance Market

Financial Services Superintendent Maria T. Vullo today announced that the Department of Financial Services (DFS) has fined Cigna Health and Life Insurance Company $2 million for violations of New York State Insurance Law involving the illegal sale of stop-loss insurance and unapproved health insurance policies that would otherwise have been part of New York’s small-group market.  Stop-loss insurance may be sold only to large group employers that self-fund underlying medical expenses in order to mitigate liability for losses that result from an unexpected amount of claims.  In a consent order entered into with Cigna and announced today, DFS found that Cigna improperly sold stop-loss and fully insured health insurance policies outside of New York to New York-based small groups with employees in New York State, and where, in many cases, the companies solicited business and conducted other activity in the state.

“By deliberately choosing to write New York risks outside of New York, Cigna’s actions harmed New York’s community-rating program for small group employers,” said Superintendent Vullo.  “Cigna cherry-picked risks, which may have improperly induced forum shopping in the New York small-group market.  DFS will continue to protect New York consumers and take appropriate enforcement action against any company that engages in unfair trade practices to undermine New York’s health insurance market.”

After receiving complaints about Cigna’s practices, DFS requested that Cigna immediately cease selling the illegal stop-loss policies pending a DFS inquiry.  The company initially agreed but later resumed selling the policies in question.  DFS also became aware that Cigna was issuing fully insured health insurance coverage outside of New York to New York-based small groups based on the fact that those small groups were incorporated outside of New York but where, in many cases, the companies’ solicitation and other activity occurred in New York.

Cigna, based in Connecticut, is licensed as a life insurance company in New York, and is authorized to write life, accident, and health insurance in New York, including stop-loss insurance.  Cigna does not have fully insured health insurance coverage products approved to sell to small groups in New York.

A targeted examination by DFS found that Cigna sold 81 group health insurance policies in violation of New York Insurance Law, including 38 stop-loss insurance policies to New York small groups seeking to self-insure and 43 fully insured health insurance policies to small groups as if they were selling to non-New York small groups.

A copy of the consent order can be found here.

You’ll be surprised at how much this one mistake can cost you

From Employee Benefit Advisor

There has been a long-standing rule that employers are prohibited from offering an incentive of any kind to an individual who is Medicare-eligible to enroll in Medicare in lieu of the employer’s group health plan.   Encouraging your older employees to leave your plan and financially incenting them to do so can cost you – big time.

While there are fines that can be assessed for encouraging or enticing the employee to take Medicare ($5,000 per situation), the bigger “hit” is the bill for claims that Medicare paid as primary versus what they should have paid as secondary. This claim can typically be for a scary big amount; representing what the carrier (if fully-insured) or employer (if self-funded) must repay Medicare for the discovered individuals.

The IRS and CMS, in a joint data-matching program, are mailing out demand for payment letters.   “Nearly every employer who has received one of these letters is usually in shock at the amount demanded that they (or the carrier) repay. Often your client is pointing the finger at you for suggesting that Bob (who turned 65 last year and is one of the reasons their renewal was so high) go on Medicare and encouraged them to pay for his Med Supp and Part D plan premium (which you probably handled for Bob, too).”

CLICK Here for the full article

 

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
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