Sec. 261.5. Prepaid legal services plans; group basis

(a) A policy or certificate of a prepaid legal services plan may be issued or delivered on a group basis only if the group conforms to one of the following descriptions:

(1) 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, covering employees of such employer, and covering all of such employees or all of any class or classes thereof, including retired employees, determined by conditions pertaining to the employment. The premium for the policy shall be paid by the policyholder, either wholly from the employer's funds, or from funds contributed by the covered employees, or from funds contributed jointly by the employer and employees. A policy on which no part of the premium is to be derived from funds contributed by the covered employees specifically for their coverage must cover all eligible employees. If all or part of the premium is to be derived from funds contributed by the covered employees, then such employees shall have the right to decline coverage under the policy.

(2) A policy issued to 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 shall conform to the following requirements:

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

(ii) The persons eligible for coverage 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 wholly by the employers or wholly by the employees, or funds contributed jointly by the employers and the employees. A policy on which no part of the premium so payable is to be derived from funds contributed by the covered employees specifically for their coverage must insure all eligible employees. If all or part of the premium is to be derived from funds contributed by the covered employees, then such employees shall have the right to decline coverage under the policy.

(3) A policy issued to a labor union, or to a duly organized association of civil service employees, which shall be deemed the policyholder, covering members of such union and covering all of such members or of any class or classes thereof determined by conditions pertaining to their employment or membership in the union or both. A policy on which no part of the premium is to be derived from funds contributed by the covered members specifically for their coverage must cover all eligible members. If all or part of the premium is to be derived from funds contributed by the covered members, then such members shall have the right to decline coverage under the policy.

(4) A policy issued to a trustee or trustees of a fund established, or participated in, by two or more employers 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 cover 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 coverage 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 covered person or by the union or unions, or by both, or jointly from such funds and funds contributed by the covered persons specifically for their coverage or from contributions by the covered persons. A policy on which no part of the premium so payable is to be derived from funds contributed by the covered persons specifically for their coverage must cover all eligible persons. If all or part of the premium is to be derived from funds contributed by the covered persons, then such persons shall have the right to decline coverage under the policy.

(iii) With respect to a policy issued to 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 insurer shall 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. The certification shall state that such decision was made at a trustees' meeting held on a date certain, and a copy of the minutes of such meeting shall be attached to such certification.

(5) A policy issued to an association, or to 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 coverage and have been in active existence for at least two years. The policy shall cover 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. The members or employees eligible for the coverage 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.

(6) A policy issued to a continuing care retirement community operating under a certificate of authority issued pursuant to article 46 of the Public Health Law which insures the residents of the community.

(7) A policy covering persons employed under 32 U.S.C. section 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 adjutant general, 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 covered, which trustee or trustees shall be deemed the policyholder, the premium of which is to be paid by the individuals covered either directly or by deduction from wages or salary.

(8) A policy issued to a college, school or other institution of learning or to the head or principal thereof, who or which shall be deemed the policyholder, covering the students of such college, school or other institution of learning.

(b)

(1) Except as provided in paragraph (2) of this subdivision, coverage under a group prepaid legal services policy shall be based upon a plan precluding individual selection either by the insureds or by the policyholder.

(2) A group recognized pursuant to paragraph (a)(2), (4), or (5) of this section, may permit a number of selections by the policyholder, if the selections offered utilize consistent plans of coverage so that the resulting plans of coverage are reasonable.

(3) Any policy issued under subdivision (a) of this section may permit a limited number of selections by the group members if the selections offered utilize consistent plans of coverage for individual group members so that the resulting plans of coverage are reasonable.

(c) A group policy shall cover all persons without evidence of insurability, provided that coverage is elected during an initial period of eligibility of at least 30 days. Rules may be established limiting future enrollment to specified time periods. An insurer shall establish minimum participation requirements that afford adequate protection against anti-selection where all or part of the premiums are derived from funds contributed by the covered group members specifically for their coverage.

(d) A certificate issued to a group member under a group master policy shall contain all material terms and conditions affecting an insured, unless the group master policy is incorporated by reference and a copy of the master policy accompanies the certificate.

(e) Except as specifically permitted under subdivision (a) of this section, no insurer shall provide coverage in regard to a group policy that:

(1) requires the purchase of insurance as a condition of group membership; or

(2) imposes any penalty upon a group member if insurance is not purchased.

(f) Except as specifically permitted under subdivision (a) of this section, no insurer shall provide coverage in regard to a group policy if:

(1) the purchase of any good or service from the group is a condition of purchasing insurance by a group member; or

(2) the purchase of insurance by a group member is a condition of purchasing any good or service from the group.

(g) No group policy, master policy or certificate shall be subject to a group or sub-group aggregate group policy limit of any kind at any time, and any policy limit applicable to an insured shall:

(1) be separate and apart from any limit to which any other insured under the group policy may be subject; and

(2) operate unaffected by the experience of any other insured or the overall experience of the group itself.

(h) Except as provided for in this Part, a group policy under this Part shall be subject to the provisions of sections 153.3(f) and (g), 153.4(b), 153.5, 153.6, and 153.7(a), (b), (d) and (e) of this Title (Regulation 135) as those provisions relate to group insurance.