NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A1039
SPONSOR: Cahill TITLE OF BILL:
An act to amend the insurance law, in relation to rating of individual
and small group health insurance contracts and policies
PURPOSE:
To amend the insurance law to preserve the current stop loss insurance
market.
SUMMARY OF PROVISIONS:
Section 1 of the bill provides an exception to the definition of small
group coverage when coverage is written by a commercial insurer.
Section 2 of the bill provides that the prohibition against a commercial
insurer acting as a third party administrator or providing stop loss
coverage to self-funded small groups would continue to apply only to
small groups of fifty or fewer employees or members.
Section 3 of the bill provides that the prohibition against a commercial
insurer acting as a third party administrator or providing stop loss
coverage to self-funded small groups would continue to apply only to
small groups of fifty or fewer employees or members.
Section 4 of the bill provides an exception to the definition of small
group coverage when coverage is written by a corporation organized under
Article 43 of the Insurance Law.
Section 5 of the bill provides that the prohibition against an Article
43 corporation acting as a third party administrator or providing stop
loss coverage to self-funded small groups would continue to apply only
to small groups of fifty or fewer employees or members.
Section 6 of the bill provides that the prohibition against an Article
43 corporation acting as a third party administrator or providing stop
loss coverage to self-funded small groups would continue to apply only
to small groups of fifty or fewer employees or members.
Section 7 establishes the effective date.
JUSTIFICATION:
Since 1993, insurance companies have been permitted to write stop loss
insurance and to provide administrative services to self-funded employer
groups with 51 or more employees. A redefinition of what constitutes a
small group, designed to comply with the federal Affordable Care Act,
had the inadvertent effect of prohibiting insurers from continuing to
issue stop loss coverage to groups with between 51 and 100 employees
effective 2016. This bill will allow the current stop loss marketplace
to operate uninterrupted for self-insured groups without directly
impacting the insured small group market.
LEGISLATIVE HISTORY:
2019-2020: A.172 - Referred to Insurance
2017-2018: A.99 Amend and recommit to Insurance
2015-2016: A.1154 - Referred to Insurance
2013-2014: A.9980 Referred to Insurance
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
1039
2021-2022 Regular Sessions
IN ASSEMBLY
January 7, 2021
___________
Introduced by M. of A. CAHILL, STIRPE, HEVESI, MAGNARELLI, ZEBROWSKI,
STECK, QUART, FRIEND -- Multi-Sponsored by -- M. of A. FITZPATRICK --
read once and referred to the Committee on Insurance
AN ACT to amend the insurance law, in relation to rating of individual
and small group health insurance contracts and policies
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 1 of subsection (a) of section 3231 of the insur-
2 ance law, as amended by section 69 of part D of chapter 56 of the laws
3 of 2013, is amended to read as follows:
4 (1) No individual health insurance policy and no group health insur-
5 ance policy covering between one and fifty employees or members of the
6 group, except as set forth in subsection (h) of this section, or between
7 one and one hundred employees or members of the group for policies
8 issued or renewed on or after January first, two thousand sixteen exclu-
9 sive of spouses and dependents, hereinafter referred to as a small
10 group, providing hospital and/or medical benefits, including medicare
11 supplemental insurance, shall be issued in this state unless such policy
12 is community rated and, notwithstanding any other provisions of law, the
13 underwriting of such policy involves no more than the imposition of a
14 pre-existing condition limitation if otherwise permitted by this arti-
15 cle.
16 § 2. Paragraph 1 of subsection (h) of section 3231 of the insurance
17 law, as amended by chapter 12 of the laws of 2016, is amended to read as
18 follows:
19 (1) Notwithstanding any other provision of this chapter, no insurer,
20 subsidiary of an insurer, or controlled person of a holding company
21 system may act as an administrator or claims paying agent, as opposed to
22 an insurer, on behalf of small groups which, if they purchased insur-
23 ance, would be subject to this section. No insurer may provide stop
24 loss, catastrophic or reinsurance coverage to small groups which, if
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD01340-01-1
A. 1039 2
1 they purchased insurance, would be subject to this section. Provided,
2 however, the provisions of this paragraph shall not apply to: (A) the
3 renewal of stop loss, catastrophic or reinsurance coverage issued and in
4 effect on January first, two thousand fifteen to small groups covering
5 between fifty-one and one hundred employees or members of the group; and
6 (B) the issuance between January first, two thousand sixteen and Decem-
7 ber thirty-first, two thousand sixteen, of stop loss, catastrophic or
8 reinsurance coverage, and any renewal thereof, to a small group covering
9 between fifty-one and one hundred employees or members of the group,
10 provided that such group had stop loss, catastrophic or reinsurance
11 coverage issued and in effect on January first, two thousand fifteen.
12 For purposes of this subsection, "small group" shall mean a group
13 comprised of between one and fifty employees or members, exclusive of
14 spouses and dependents.
15 § 3. Paragraph 1 of subsection (h) of section 3231 of the insurance
16 law, as added by chapter 501 of the laws of 1992, is amended to read as
17 follows:
18 (1) Notwithstanding any other provision of this chapter, no insurer,
19 subsidiary of an insurer, or controlled person of a holding company
20 system may act as an administrator or claims paying agent, as opposed to
21 an insurer, on behalf of small groups which, if they purchased insur-
22 ance, would be subject to this section. No insurer, subsidiary of an
23 insurer, or controlled person of a holding company may provide stop
24 loss, catastrophic or reinsurance coverage to small groups which, if
25 they purchased insurance, would be subject to this section. For purposes
26 of this subsection, "small group" shall mean a group comprised of
27 between one and fifty employees or members, exclusive of spouses and
28 dependents.
29 § 4. Paragraph 1 of subsection (a) of section 4317 of the insurance
30 law, as amended by section 72 of part D of chapter 56 of the laws of
31 2013, is amended to read as follows:
32 (1) No individual health insurance contract and no group health insur-
33 ance contract covering between one and fifty employees or members of the
34 group, except as set forth in subsection (e) of this section, or between
35 one and one hundred employees or members of the group for policies
36 issued or renewed on or after January first, two thousand sixteen exclu-
37 sive of spouses and dependents, including contracts for which the premi-
38 ums are paid by a remitting agent for a group, hereinafter referred to
39 as a small group, providing hospital and/or medical benefits, including
40 Medicare supplemental insurance, shall be issued in this state unless
41 such contract is community rated and, notwithstanding any other
42 provisions of law, the underwriting of such contract involves no more
43 than the imposition of a pre-existing condition limitation if otherwise
44 permitted by this article.
45 § 5. Paragraph 1 of subsection (e) of section 4317 of the insurance
46 law, as amended by chapter 12 of the laws of 2016, is amended to read as
47 follows:
48 (1) Notwithstanding any other provision of this chapter, no insurer,
49 subsidiary of an insurer, or controlled person of a holding company
50 system may act as an administrator or claims paying agent, as opposed to
51 an insurer, on behalf of small groups which, if they purchased insur-
52 ance, would be subject to this section. No insurer may provide stop
53 loss, catastrophic or reinsurance coverage to small groups which, if
54 they purchased insurance, would be subject to this section. Provided,
55 however, the provisions of this paragraph shall not apply to: (A) the
56 renewal of stop loss, catastrophic or reinsurance coverage issued and in
A. 1039 3
1 effect on January first, two thousand fifteen to small groups covering
2 between fifty-one and one hundred employees or members of the group; and
3 (B) the issuance between January first, two thousand sixteen, and Decem-
4 ber thirty-first, two thousand sixteen, of stop loss, catastrophic or
5 reinsurance coverage, and any renewal thereof, to a small group covering
6 between fifty-one and one hundred employees or members of the group,
7 provided that such group had stop loss, catastrophic or reinsurance
8 coverage issued and in effect on January first, two thousand fifteen.
9 For purposes of this subsection, "small group" shall mean a group
10 comprised of between one and fifty employees or members, exclusive of
11 spouses and dependents.
12 § 6. Paragraph 1 of subsection (e) of section 4317 of the insurance
13 law, as amended by section 72 of part D of chapter 56 of the laws of
14 2013, is amended to read as follows:
15 (1) Notwithstanding any other provision of this chapter, no insurer,
16 subsidiary of an insurer, or controlled person of a holding company
17 system may act as an administrator or claims paying agent, as opposed to
18 an insurer, on behalf of small groups which, if they purchased insur-
19 ance, would be subject to this section. No insurer, subsidiary of an
20 insurer, or controlled person of a holding company may provide stop
21 loss, catastrophic or reinsurance coverage to small groups which, if
22 they purchased insurance, would be subject to this section. For
23 purposes of this subsection, "small group" shall mean a group comprised
24 of between one and fifty employees or members, exclusive of spouses and
25 dependents.
26 § 7. This act shall take effect immediately; provided, however the
27 amendments to paragraph 1 of subsection (h) of section 3231 of the
28 insurance law made by section two of this act shall be subject to the
29 expiration and reversion of such paragraph pursuant to section 5 of
30 chapter 588 of the laws of 2015, as amended, when upon such date the
31 provisions of section three of this act shall take effect; and provided,
32 further, the amendments to paragraph 1 of subsection (e) of section 4317
33 of the insurance law made by section five of this act shall be subject
34 to the expiration and reversion of such paragraph pursuant to section 5
35 of chapter 588 of the laws of 2015, as amended, when upon such date the
36 provisions of section six of this act shall take effect.
