Amd §§3231 & 4317, Ins L; rpld §7, Chap 12 of 2016
Amends the definition of "small group" for purposes of health insurance policies and contracts to fifty employees or fewer; and repeals provisions requiring the superintendent to conduct an impact study.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7077
SPONSOR: Crespo TITLE OF BILL: An act to amend the insurance law, in relation to the
definition of small group; and to repeal section 7 of chapter 12 of the
laws of 2016 relating to directing the superintendent of financial
services to contract with an independent entity to conduct an assessment
regarding the impact of the prohibition on the sale of stop loss,
catastrophic and reinsurance coverage to the small group market relating
thereto
PURPOSE:
To conform the insurance law definition of "small group" with the defi-
nition of "small employer" under the recently enacted federal Protecting
Affordable Coverage for Employees (PACE) Act (Public Law 114-60, effec-
tive October 7, 2015), which amended applicable provisions of the feder-
al Patient Protection and Affordable Care Act(ACA) (Public Law 111-148).
SUMMARY OF PROVISIONS:
Section 1 amends insurance law section 3231(a)(1) to return the defi-
nition of "small group" to 1-50 employees or members of such group.
Section 2 amends insurance law section 3231(a)(3) to return the defi-
nition of "small group" to 1-50 employees or members of such group.
Section 3 amends insurance law section 3231(h)(I) to harmonize the
provisions of such subsection with the definition of "small group."
Section 4 amends insurance law section 4317(a)(1) to return the defi-
nition of "small group" to 1-50 employees or members of such group.
Section 5 amends insurance law section 4317(e)(1) to harmonize the
provisions of such subsection with the definition of "small group."
Section 6 amends insurance law section 3231(g)(1) to harmonize the
provisions of such subsection with the definition of "small group."
Section 7 amends insurance law section 4317(d)(1) to harmonize the
provisions of such subsection with the definition of "small group."
Section 8 repeals section 7 of chapter 12 of the laws of 2016.
Section 9 is the effective date.
JUSTIFICATION:
The historic size of the small group market has been employers with 50
or fewer employees. State regulators, in every state, either via law or
administrative rule had established this small group size at 1-50 for
their local insurance market.
The federal ACA, amongst other things, changed the definition of "small
employer" from 1-50 employees to 1-100 employees, as of January I, 2016.
As part of the passage of the State Fiscal Year (SFY) 2013-14 New York
State Budget (C.56, L. 2013), the State amended the definition of "small
group" in the NY insurance law to 1-100 employees or members, to conform
with the federal ACA definition, effective January 1, 2016. This expan-
sion of the definition of "small group" to 1-100 employees or members of
such group, has had the unintended consequence of increasing the costs
of health insurance coverage for groups of 51-100, by virtue of raising
premium rates or subscriber costs together with higher deductibles and
co-pays, coupled with fewer available policy choices from insurance
carriers or health plans, and narrower healthcare provider panels, both
in and out of network. The small group definitional expansion has also
caused certain midsized, self-insured groups in the 51-100 range, to
lose their stop loss insurance or catastrophic Coverage, since this
coverage cannot be legally sold into the NY small group market.
Trade organizations, business groups and market participants nationwide
supported changes to the ACA that repealed this requirement. The bipar-
tisan PACE Act was intended to enact market reforms to revise the ACA
definition of small employer back to 1-50, to( mitigate such market
disruptions in the several states. The PACE Act passed Congress unan-
imously and was signed by President Obama in the fall of 2015. Since
that time, nearly every state has adjusted either by legislation, regu-
lation or administrative order their small group size to remain at 50 or
below. Four states have not; California, Colorado, New York and Vermont.
This bill would obviate the foregoing problems and market disruptions
simply by conforming the definition of "small group" in the NY insurance
law with the federal definition of "small employer" under the PACE. Act,
back to 1-50 employees or members. This action is necessary to preserve
a robust health insurance marketplace, inside and outside the New York
State of Health (NYSOH) Insurance Marketplace Exchange, for all midsized
employer and union groups, together with municipal, school and library
consortiums.
LEGISLATIVE HISTORY:
A.10402 of 2015 died in insurance
FISCAL IMPLICATIONS:
None to the State. Substantial health plan cost savings are expected to
be realized by municipalities, school districts and library consortiums.
EFFECTIVE DATE:
Immediately, provided however that the amendments to paragraph 1 of
subsection (g) and paragraph I of subsection(h) of section 3231, and
paragraph 1 of subsection (d) and paragraph 1 of subsection (e) of
section 4317 of the insurance law made by sections 6, 3, 7, and 5 of
this act respectively shall not affect the expiration and reversion of
such paragraphs and shall expire and be deemed repealed therewith.
