Amd §§7402, 7403 & 7405, add Art 81 §§8101 - 8104, Ins L; amd §72, add §98-e, St Fin L
Creates the health insurance guaranty fund to protect covered individuals against the failure or inability of a health insurer to perform its contractual obligations due to financial impairment or insolvency.
STATE OF NEW YORK
________________________________________________________________________
6305
2025-2026 Regular Sessions
IN ASSEMBLY
March 3, 2025
___________
Introduced by M. of A. SIMONE, BENEDETTO, BRAUNSTEIN, COLTON, GONZALEZ-
ROJAS, HEVESI, HUNTER, MAGNARELLI, OTIS, PAULIN, PEOPLES-STOKES,
ROSENTHAL, SEAWRIGHT, STECK, STIRPE, WEPRIN -- Multi-Sponsored by --
M. of A. COOK, EPSTEIN, GLICK, LUPARDO, SIMON -- read once and
referred to the Committee on Insurance
AN ACT to amend the insurance law and the state finance law, in relation
to creating the health insurance guaranty fund
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subsection (e) of section 7402 of the insurance law is
2 amended to read as follows:
3 (e) Is found, after examination, to be in such condition that its
4 further transaction of business will be hazardous to its policyholders,
5 creditors, or the public. This shall include a health insurer, as
6 defined in article eighty-one of this chapter, that is consistently
7 unable to meet the requirements of section three thousand two hundred
8 twenty-four-a of this chapter.
9 § 2. Section 7403 of the insurance law is amended by adding a new
10 subsection (e) to read as follows:
11 (e)(1) Upon a determination by the superintendent and the rehabilita-
12 tor that funds from the New York health insurance consumer protection
13 security fund are necessary to meet the requirements of article eighty-
14 one of this chapter, the superintendent shall make available such funds
15 as are necessary, pursuant to the requirements of such article.
16 (2) The superintendent shall advance such funds as may be necessary
17 pursuant to subsection (d) of section eight thousand one hundred four of
18 this chapter. The rehabilitator and the superintendent shall establish a
19 plan, if possible, for repayment of the advance, at a rate of interest
20 determined by the superintendent.
21 (3) Advances, pursuant to paragraph two of this subsection, shall, in
22 all respects except to rate of interest, be subject to the provisions of
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03984-01-5
A. 6305 2
1 section one thousand three hundred seven of this chapter, provided that
2 in the event that an insurer which has received an advance pursuant to
3 this subsection is subsequently the subject of an order of liquidation,
4 the claim of the fund for the advance and any accrued interest shall
5 have priority above claims of all nonsecured creditors, provided the
6 requirements of article eighty-one of this chapter have been met, and
7 shall be paid immediately to the fund or as soon as assets are available
8 therefor.
9 § 3. Paragraph 1 of subsection (f) of section 7405 of the insurance
10 law, as amended by chapter 33 of the laws of 2005, is amended to read as
11 follows:
12 (1) No later than one hundred eighty days after a final order of
13 liquidation with an adjudication of insolvency of an insurer by a court
14 of competent jurisdiction of this state, the liquidator may in his sole
15 discretion make application to the court for approval of a proposal to
16 disburse assets out of marshalled assets, from time to time as such
17 assets become available, to any fund established by article seventy-six
18 of this chapter, article six-A of the workers' compensation law [and],
19 any foreign entity performing a similar function, and any fund estab-
20 lished pursuant to article eighty-one of this chapter, provided that the
21 requirements of subsection (a) of section eight thousand one hundred
22 three of this chapter have been met, having obligations because of such
23 insolvency. If the liquidator determines that there are insufficient
24 assets to disburse, the application authorized by this subsection shall
25 be considered satisfied by a filing by the liquidator stating the
26 reasons for this determination.
27 § 4. The insurance law is amended by adding a new article 81 to read
28 as follows:
29 ARTICLE 81
30 HEALTH INSURANCE GUARANTY FUND
31 Section 8101. Purpose.
32 8102. Definitions.
33 8103. New York health insurance consumer protection security
34 fund.
35 8104. Powers of the superintendent.
36 § 8101. Purpose. The purpose of this article is to protect covered
37 individuals against the failure or inability of a health insurer to
38 perform its contractual obligations due to financial impairment or
39 insolvency. To provide this protection, the legislature hereby creates a
40 New York health insurance consumer protection security fund to serve as
41 a guaranty fund mechanism capable of insuring that the financial obli-
42 gations of health insurers to their enrollees and health care providers
43 are satisfied.
44 § 8102. Definitions. As used in this article:
45 (a) "Fund" means the New York health insurance consumer protection
46 security fund created by this article.
47 (b) "Health insurer" means any organization or entity providing
48 reimbursement for a covered expense under any individual, group or blan-
49 ket policy or contract covering the kinds of insurance described in item
50 (i) of paragraph three of subsection (a) of section one thousand one
51 hundred thirteen of this chapter and licensed under article thirty-two
52 or forty-two of this chapter, which is not a member of, or participant
53 in, or a subsidiary of a member of or participant in, the funds created
54 pursuant to articles seventy-five, seventy-six, and seventy-seven of
55 this chapter; a corporation organized under article forty-three of this
A. 6305 3
1 chapter; or an organization certified under article forty-four of the
2 public health law.
3 (c) "Contractual obligation" means any payment or reimbursement owed
4 by a health insurer for a covered benefit under a policy, contract, or
5 comprehensive health benefits plan.
6 (d) "Impaired health insurer" means a health insurer for whom the
7 superintendent has initiated a proceeding under the provisions of arti-
8 cle seventy-four of this chapter.
9 (e) "Commissioner" means the commissioner of taxation and finance.
10 § 8103. New York health insurance consumer protection security fund.
11 (a) Consistent with the provisions of subdivision one of section nine-
12 ty-eight-e of the state finance law, there is hereby established a New
13 York health insurance consumer protection security fund. Such fund shall
14 be used in the payment of unpaid contractual obligations, in whole or in
15 part, by an impaired health insurer, after application of any funds
16 available from a proceeding implemented pursuant to article seventy-four
17 of this chapter.
18 (b)(1) Payment into the fund by health insurers shall be made through
19 an assessment based on the premiums received by a health insurer for
20 business in this state for the most recent calendar year for which
21 premium information is available, excluding premiums received for indi-
22 viduals under title XIX of the social security act. The superintendent
23 shall establish assessment levels sufficient to fully pay all unpaid
24 claims of an impaired health insurer, pursuant to subsections (b), (c)
25 and (d) of section eight thousand one hundred four of this article, and
26 to repay any transfers made pursuant to subdivision five of section
27 seventy-two of the state finance law.
28 (2) The superintendent may exempt, abate or defer, in whole or in
29 part, the assessment of a health insurer if the superintendent deter-
30 mines that payment of the assessment would endanger the ability of the
31 health insurer to fulfill its contractual obligations or place the
32 health insurer in an unsafe or unsound financial condition.
33 (3) In the event an assessment against a health insurer is exempted,
34 abated or deferred, in whole or in part, the amount by which that
35 assessment is exempted, abated or deferred shall be assessed against
36 other health insurers in a manner consistent with this section.
37 (c) Repayment of health insurers when funds become available from a
38 proceeding pursuant to article seventy-four of this chapter shall be
39 proportionate to the contribution from each health insurer.
40 § 8104. Powers of the superintendent. (a) For any impaired health
41 insurer, the superintendent shall direct the commissioner to make
42 payments from the New York health insurance consumer protection security
43 fund to ensure that payments to health care providers, or indemnity
44 payments to covered individuals, are made in full for services provided
45 that would not otherwise be fully reimbursed despite the proceedings
46 implemented pursuant to article seventy-four of this chapter. Services
47 provided either prior to the implementation of a proceeding under arti-
48 cle seventy-four of this chapter or after implementation of such
49 proceeding shall be eligible for reimbursement, in part or in whole,
50 from the fund. Payment in full shall be determined by the terms of the
51 health insurance contract, any contract between a health care provider
52 and the impaired health insurer and any applicable state or federal laws
53 or regulations including but not limited to part H of chapter sixty of
54 the laws of two thousand fourteen and section two thousand nineteen-a of
55 the Public Health Services Act, as amended by the Patient Protection and
56 affordable Care Act.
A. 6305 4
1 (b) The superintendent shall direct the commissioner to make payments
2 to ensure that payment in full is made to health care providers, or
3 indemnity payments to covered individuals, for services provided before
4 the implementation of proceedings pursuant to article seventy-four of
5 this chapter within thirty days of the implementation of such proceed-
6 ing.
7 (c) The superintendent shall direct the commissioner to ensure that
8 payment in full is made to health care providers, or indemnity payments
9 to covered individuals, for services provided after the implementation
10 of proceedings pursuant to article seventy-four of this chapter within
11 thirty days of receipt of a claim.
12 (d) If necessary, the superintendent shall direct the commissioner to
13 advance monies from the fund to comply with the provisions of
14 subsections (b) and (c) of this section.
15 (e) The superintendent shall notify the director of the budget of the
16 need for monies to be transferred pursuant to subdivision five of
17 section seventy-two of the state finance law to meet the requirements of
18 subsections (b), (c) and (d) of this section.
19 (f) The superintendent shall direct the commissioner to use the monies
20 of the fund to repay any transfers made pursuant to subdivision five of
21 section seventy-two of the state finance law, when such funds are paid
22 pursuant to subsection (b) of section eight thousand one hundred three
23 of this article.
24 (g) The superintendent shall ensure that the cost of assessments
25 established pursuant to subdivision (b) of section eight thousand one
26 hundred three of this article are not included in premiums by any health
27 insurer.
28 § 5. Section 72 of the state finance law is amended by adding a new
29 subdivision 5 to read as follows:
30 5. Notwithstanding any provision of law to the contrary, upon notifi-
31 cation from the superintendent of financial services of the need for
32 monies to meet the requirements of subsections (b), (c) and (d) of
33 section eight thousand one hundred four of the insurance law, the direc-
34 tor of the budget shall transfer such funds as are necessary.
35 § 6. The state finance law is amended by adding a new section 98-e to
36 read as follows:
37 § 98-e. New York health insurance consumer protection security fund.
38 1. There is hereby established in the custody of the commissioner of the
39 department of taxation and finance an account of the miscellaneous
40 special revenue fund to be known as the New York health insurance
41 consumer protection security fund account.
42 2. Notwithstanding any other law, rule or regulation to the contrary,
43 the commissioner of taxation and finance is hereby authorized and
44 directed to receive for deposit to the credit of the New York health
45 insurance consumer protection security fund account, assessments imposed
46 pursuant to article eighty-one of the insurance law and transfers from
47 the general fund pursuant to subdivision five of section seventy-two of
48 this article.
49 3. The commissioner of taxation and finance shall make payments from
50 the monies on deposit in the New York health insurance consumer
51 protection security fund account in the amounts and at the times deter-
52 mined by the superintendent of insurance.
53 § 7. This act shall take effect immediately and shall be applicable to
54 any health insurer determined by the superintendent of financial
55 services, on or after such effective date, to be insolvent within the
56 meaning of section 1309 of the insurance law.
