Senate Bill S4328

2013-2014 Legislative Session

Relates to the discontinuance of a class of group of blanket policy or contract of hospital, surgical or medical expense insurance and relates to a marketplace withdrawal

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Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2014	referred to insurance
Mar 21, 2013	referred to insurance

2013-S4328 (ACTIVE) - Details

See Assembly Version of this Bill:: A7295
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §§3221 & 4305, Ins L

2013-S4328 (ACTIVE) - Summary

Relates to the discontinuance of a class of group or blanket policy or contract of hospital, surgical or medical expense insurance; relates to a marketplace withdrawal.

2013-S4328 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S4328

TITLE OF BILL:  An act to amend the insurance law, in relation to the
discontinuance of a class of group or blanket policy or contract of
hospital, surgical  or medical expense insurance, and in relation to a
marketplace withdrawal

Purpose of the Bill:

The purpose of this bill is to amend the Insurance Law to require
discontinuances of particular classes of group or blanket policies of
hospital, surgical or medical expense insurance to occur at the time
of coverage renewal and also to require insurers discontinuing
hospital, surgical or medical expense insurance offered in the small
or large group market to provide a written plan that is acceptable to
the Superintendent of Financial Services (Superintendent) to minimize
potential disruption in the marketplace.

Summary of Provisions:

Sections 1 and 5 of the bill would amend insurance Law
3221(p)(3)(A) and 4305(j)(3)(A) to require that a class discontinuance
of a group or blanket policy or contract of hospital, surgical or
medical expense insurance only may occur at the time of coverage
renewal unless the Superintendent determines that continuation of the
policy or contract would jeopardize the insurer's solvency,

continuation of the policy or contract would not be in the best
interests of the policyholders or contract holders and member insureds
or the public, discontinuance is necessary to permit the insurer to
standardize its policy or contract forms or another date is necessary
in order to effectuate an orderly discontinuance.

Sections 2 and 6 of the bill would add a new Insurance Law
3221(p)(3)(A)(v) and 4305(j)(3)(A)(v) to require insurers
discontinuing a particular class of group or blanket policy or
contract of hospital, surgical or medical expense insurance offered in
the small or large group market to provide a written plan that is
acceptable to the Superintendent to minimize potential disruption in
the marketplace.

Sections 3 and 7 of the bill amend Insurance Law §§ 3221(p)(3)(E) and
4305(j)(3)(E) to require that a discontinuance of all hospital,
surgical or medical expense insurance offered in the small or large
group market, or both markets, in New York, only may occur at the time
of coverage renewal, unless the Superintendent determines that
continuation of the policy or contract would jeopardize the insurer's
solvency, continuation of the policy or contract would not be in the
best interests of the policyholders or contract holders and member
insureds or the public or another date is necessary in order to
effectuate an orderly discontinuance.

Sections 4 and 8 of the bill would amend Insurance Law
3221(p)(3)(E)(iii) and 4305(j)(3)(E)(iii) to clarify that the written
plan to minimize potential disruption in the marketplace submitted by
insurers electing to discontinue offering all hospital, surgical or
medical expense insurance offered in the small or large group market,


or both markets, in New York, must be acceptable to the
Superintendent.

Section 9 of the bill would provide that the bill take effect
immediately.

Existing Law:  Insurance Law §§ 3221 and 4305 allow insurers to
discontinue a class of policies by providing written notice to each
policyholder or contract holder (and to all employees and member
insureds covered under such coverage) of such discontinuance at least
90 days prior to the date of discontinuance of such coverage. The law
is silent as to when such discontinuance may be effectuated.

These provisions also allow insurers to discontinue offering such
insurance in the small or large group market, or both markets, in New
York, by providing written notice to the Superintendent and each
policyholder or contract holder (and to all employees and member
insureds covered under such coverage) of such discontinuance at least
180 days prior to the date of discontinuance of such coverage. The law
is silent as to when such discontinuance may be effectuated. They
further require insurers to provide the Superintendent with a written
plan to minimize potential disruption in the marketplace.

Prior Legislative History:

This is a new bill.

Statement in Support:  A class discontinuance has the potential to
cause disruption in the marketplace if large numbers of groups and
member insureds must find replacement coverage as of the same date
from a limited number of insurers. Those insurers may not be able to
readily absorb a large influx of new groups and member insureds
enrolling at the same time, and their policies and contracts may not
be priced to take into account such a large increase in member
insureds. Their provider networks may not be able to serve adequately
the increased number of member insureds.

Moreover, persons losing benefits as a result of a discontinuance
implemented on a single date will lose those benefits much sooner than
if the discontinuance is required to be implemented at the time of
coverage renewal. Currently, the law is silent as to when insurers may
terminate the coverage. This bill would reduce market disruption by
clarifying that insurers seeking to discontinue policies do so on a
rolling basis as the group and blanket policies come up for renewal.
This bill also would protect consumers with high deductible coverage
from having their coverage discontinued in the middle of a plan year
and possibly losing credits for the expenses that have been applied
already toward satisfying their deductible. Consumers will be
protected by ensuring their coverage will continue through the end of
the policy year.

However, the bill also gives the Superintendent the ability to address
the circumstances where the Superintendent determines that
continuation of the policies would jeopardize the insurer's solvency,
continuation of the policies would not be in the best interests of the
policyholders and member insureds of the insurer or the public,
discontinuance is necessary to permit the insurer to standardize its


policy forms or another date is necessary in order to effectuate an
orderly discontinuance.

The bill further requires insurers to submit an acceptable written
plan before discontinuing coverage in order to minimize potential
disruption in the marketplace. The plan will provide the
Superintendent with the particulars of how the discontinuance will
impact the insurer, its member insureds and the small or large group
health insurance market in New York. It will also enable the
Superintendent to assess factors such as the number of affected groups
and insured members, the geographic area impacted, the availability of
replacement coverage and to determine the least disruptive dates upon
which the insurer may implement the discontinuance.

In addition, a market withdrawal, where insurers elect to discontinue
offering all hospital; surgical or medical expense insurance offered
in the small or large group market, or both markets, also has the
potential to cause disruption in the marketplace. Currently, the law
is silent as to when insurers may terminate the coverage. This bill
would minimize such a market disruption by clarifying that insurers
seeking to withdraw from the small group market, large group market,
or both markets, in New York, must do so on a rolling basis as
policies come up for renewal. It also would make the statutory
sections regarding market withdrawals and class discontinuances
consistent in that regard.

Insurers electing to discontinue offering all hospital, surgical or
medical expense insurance offered in the small or large group market,
or both markets, are already required to provide the Superintendent
with a written plan to minimize potential disruption in the
marketplace. This bill clarifies that the plan must be acceptable to
the Superintendent.

Fiscal Implications: None to the State.

Effective Date:  This bill would take effect immediately.

2013-S4328 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4328

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             March 21, 2013
                               ___________

Introduced  by Sen. SEWARD -- (at request of the Department of Financial
  Services) -- read twice and ordered printed, and when  printed  to  be
  committed to the Committee on Insurance

AN  ACT to amend the insurance law, in relation to the discontinuance of
  a class of group or blanket policy or contract of  hospital,  surgical
  or  medical  expense insurance, and in relation to a marketplace with-
  drawal

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The opening paragraph of subparagraph (A) of paragraph 3 of
subsection (p) of section 3221 of the insurance law, as amended by chap-
ter 398 of the laws of 2010, is amended to read as follows:
  In  any  case  in  which  an insurer decides to discontinue offering a
particular class of group or blanket policy  of  hospital,  surgical  or
medical  expense  insurance  offered in the small or large group market,
the policy of such class may be discontinued by the insurer  in  accord-
ance  with  this  chapter  in  such  market ONLY AT THE TIME OF COVERAGE
RENEWAL, UNLESS THE SUPERINTENDENT DETERMINES THAT CONTINUATION  OF  THE
POLICY  WOULD  JEOPARDIZE  THE  INSURER'S  SOLVENCY, CONTINUATION OF THE
POLICY WOULD NOT BE IN THE  BEST  INTERESTS  OF  THE  POLICYHOLDERS  AND
MEMBER  INSUREDS  OF THE INSURER OR THE PUBLIC, DISCONTINUANCE IS NECES-
SARY TO PERMIT THE INSURER TO STANDARDIZE ITS POLICY FORMS,  OR  ANOTHER
DATE  IS NECESSARY IN ORDER TO EFFECTUATE AN ORDERLY DISCONTINUANCE; AND
only if:
  S 2. Items (iii) and (iv)  of  subparagraph  (A)  of  paragraph  3  of
subsection (p) of section 3221 of the insurance law, as amended by chap-
ter  398 of the laws of 2010, are amended and a new item (v) is added to
read as follows:
  (iii) in exercising the option to discontinue coverage of  this  class
and  in offering the option of coverage under item (ii) of this subpara-
graph, the insurer acts uniformly without regard to the  claims  experi-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08858-01-3

S. 4328                             2

ence of those policyholders or any health status-related factor relating
to  any  particular  covered  employee,  member  insured or dependent or
particular new employee, member insured  or  dependent  who  may  become
eligible  for  such  coverage,  and the insurer is not discontinuing the
coverage of this class with the intent or as a pretext to  discontinuing
the coverage of any such employee, member insured or dependent; [and]
  (iv)  at least ninety days prior to the date of discontinuance of such
coverage, the insurer provides written notice to the  superintendent  of
such discontinuance, including the reason for the discontinuance, and an
officer  or director of the insurer certifies to the superintendent that
the insurer has complied with items (i), (ii) and (iii) of  this  [para-
graph]  SUBPARAGRAPH.  If such notice does not include the date or dates
that the insurer mailed or delivered the notice  to  all  policyholders,
covered  [employers]  EMPLOYEES  and  member insureds, the insurer shall
notify the  superintendent  of  such  date  within  seven  days  of  the
completion of the mailing or delivery[.]; AND
  (V)  AS  PART  OF THE NOTICE TO THE SUPERINTENDENT REFERRED TO IN ITEM
(IV) OF THIS SUBPARAGRAPH, THE INSURER SHALL PROVIDE A WRITTEN PLAN THAT
IS ACCEPTABLE TO THE SUPERINTENDENT TO MINIMIZE POTENTIAL DISRUPTION  IN
THE MARKETPLACE OCCASIONED BY THE INSURER'S DISCONTINUANCE OF A CLASS OF
ONE  OR  MORE  GROUP  OR  BLANKET  POLICIES  IN THE SMALL OR LARGE GROUP
MARKET.
  S 3. The opening paragraph of  subparagraph  (E)  of  paragraph  3  of
subsection (p) of section 3221 of the insurance law, as amended by chap-
ter 398 of the laws of 2010, is amended to read as follows:
  In  any  case  in  which an insurer elects to discontinue offering all
hospital, surgical and medical  expense  coverage  in  the  small  group
market or the large group market, or both markets, in this state, health
insurance  coverage  may be discontinued by the insurer only AT THE TIME
OF COVERAGE RENEWAL, UNLESS THE SUPERINTENDENT DETERMINES THAT CONTINUA-
TION OF THE POLICY WOULD JEOPARDIZE THE INSURER'S SOLVENCY, CONTINUATION
OF THE POLICY WOULD NOT BE IN THE BEST INTERESTS  OF  THE  POLICYHOLDERS
AND  MEMBER  INSUREDS  OF  THE INSURER OR THE PUBLIC, OR ANOTHER DATE IS
NECESSARY IN ORDER TO EFFECTUATE AN ORDERLY DISCONTINUANCE; AND ONLY if:
  S 4. Item (iii) of subparagraph (E) of paragraph 3 of  subsection  (p)
of  section  3221 of the insurance law, as amended by chapter 398 of the
laws of 2010, is amended to read as follows:
  (iii) in addition to the notice to the superintendent referred  to  in
item  (i)  of  this  subparagraph, the insurer shall provide [the super-
intendent with] a written plan THAT IS ACCEPTABLE TO THE  SUPERINTENDENT
to  minimize  potential  disruption in the marketplace occasioned by the
insurer's withdrawal from the market.
  S 5. The opening paragraph of  subparagraph  (A)  of  paragraph  3  of
subsection (j) of section 4305 of the insurance law, as amended by chap-
ter 398 of the laws of 2010, is amended to read as follows:
  In  any  case in which a corporation decides to discontinue offering a
particular class of group or blanket contract of hospital,  surgical  or
medical  expense  insurance  offered in the small or large group market,
the contract of such class may be discontinued  by  the  corporation  in
accordance with this chapter in such market ONLY AT THE TIME OF COVERAGE
RENEWAL,  UNLESS  THE SUPERINTENDENT DETERMINES THAT CONTINUATION OF THE
CONTRACT WOULD JEOPARDIZE THE CORPORATION'S  SOLVENCY,  CONTINUATION  OF
THE  CONTRACT  WOULD NOT BE IN THE BEST INTERESTS OF THE CONTRACTHOLDERS
AND MEMBER INSUREDS OF THE CORPORATION OR THE PUBLIC, DISCONTINUANCE  IS
NECESSARY  TO  PERMIT THE CORPORATION TO STANDARDIZE ITS CONTRACT FORMS,

S. 4328                             3

OR ANOTHER DATE IS NECESSARY IN ORDER TO EFFECTUATE AN  ORDERLY  DISCON-
TINUANCE; AND only if:
  S  6.  Items  (iii)  and  (iv)  of  subparagraph (A) of paragraph 3 of
subsection (j) of section 4305 of the insurance law, as amended by chap-
ter 398 of the laws of 2010, are amended and a new item (v) is added  to
read as follows:
  (iii)  in  exercising the option to discontinue coverage of this class
and in offering the option of coverage under item (ii) of this  subpara-
graph, the corporation acts uniformly without regard to the claims expe-
rience  of  those  contract  holders or any health status-related factor
relating to any particular covered employee, member insured or dependent
who may become eligible for such coverage, and the  corporation  is  not
discontinuing the coverage of this class with the intent or as a pretext
to  discontinuing  the  coverage of any such employee, member insured or
dependent; [and]
  (iv) at least ninety days prior to the date of discontinuance of  such
coverage,  the corporation provides written notice to the superintendent
of such discontinuance, including the reason for the discontinuance, and
an officer or director of the corporation certifies to  the  superinten-
dent that the corporation has complied with items (i), (ii) and (iii) of
this  [paragraph] SUBPARAGRAPH. If such notice does not include the date
or dates that the corporation mailed or  delivered  the  notice  to  all
contract holders, covered [employers] EMPLOYEES and member insureds, the
corporation  shall  notify  the superintendent of such date within seven
days of the completion of the mailing or delivery[.]; AND
  (V) AS PART OF THE NOTICE TO THE SUPERINTENDENT REFERRED  TO  IN  ITEM
(IV)  OF THIS SUBPARAGRAPH, THE CORPORATION SHALL PROVIDE A WRITTEN PLAN
THAT  IS  ACCEPTABLE  TO  THE  SUPERINTENDENT  TO   MINIMIZE   POTENTIAL
DISRUPTION IN THE MARKETPLACE OCCASIONED BY THE CORPORATION'S DISCONTIN-
UANCE  OF A CLASS OF ONE OR MORE GROUP OR BLANKET CONTRACTS IN THE SMALL
OR LARGE GROUP MARKET.
  S 7. The opening paragraph of  subparagraph  (E)  of  paragraph  3  of
subsection (j) of section 4305 of the insurance law, as amended by chap-
ter 398 of the laws of 2010, is amended to read as follows:
  In  any case in which a corporation elects to discontinue offering all
hospital, surgical and medical  expense  coverage  in  the  small  group
market or the large group market, or both markets, in this state, health
insurance  coverage  may  be discontinued by the corporation ONLY AT THE
TIME OF COVERAGE RENEWAL,  UNLESS  THE  SUPERINTENDENT  DETERMINES  THAT
CONTINUATION  OF THE CONTRACT WOULD JEOPARDIZE THE CORPORATION'S SOLVEN-
CY, CONTINUATION OF THE CONTRACT WOULD NOT BE IN THE BEST  INTERESTS  OF
THE  CONTRACTHOLDERS  AND  MEMBER  INSUREDS  OF  THE  CORPORATION OR THE
PUBLIC, OR ANOTHER DATE IS NECESSARY IN ORDER TO EFFECTUATE  AN  ORDERLY
DISCONTINUANCE; AND only if:
  S  8.  Item (iii) of subparagraph (E) of paragraph 3 of subsection (j)
of section 4305 of the insurance law, as amended by chapter 398  of  the
laws of 2010, is amended to read as follows:
  (iii)  in  addition to the notice to the superintendent referred to in
item (i) of this subparagraph, the corporation shall provide [the super-
intendent with] a written plan THAT IS ACCEPTABLE TO THE  SUPERINTENDENT
to  minimize  potential  disruption in the marketplace occasioned by the
corporation's withdrawal from the market.
  S 9. This act shall take effect immediately.

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Senate Bill S4328

Sponsored By

Archive: Last Bill Status - In Senate Committee Insurance Committee

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2013-S4328 (ACTIVE) - Details

2013-S4328 (ACTIVE) - Summary

2013-S4328 (ACTIVE) - Sponsor Memo

2013-S4328 (ACTIVE) - Bill Text download pdf

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Sponsored By

James L. Seward

Archive: Last Bill Status - In Senate Committee Insurance Committee

Actions

2013-S4328 (ACTIVE) - Details

2013-S4328 (ACTIVE) - Summary

2013-S4328 (ACTIVE) - Sponsor Memo

2013-S4328 (ACTIVE) - Bill Text download pdf

Comments