NY State Senate Bill 2017-S2270

Senate Bill S2270

2017-2018 Legislative Session

Requires insurers to provide certificate holders with at least thirty days prior written notice of termination of group health insurance coverage

download bill text pdf

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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2018	referred to insurance
Jan 12, 2017	referred to insurance

2017-S2270 (ACTIVE) - Details

See Assembly Version of this Bill:: A4959
Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §§3221 & 4305, Ins L; add §4407-a, Pub Health L
Versions Introduced in Other Legislative Sessions:: 2009-2010: S8197, A6647
2011-2012: S1167, A2006
2013-2014: S2695, A640
2015-2016: S1932, A2649
2019-2020: S3764, A4241

2017-S2270 (ACTIVE) - Summary

Requires insurers to provide certificate holders with at least thirty days prior written notice of termination of group health insurance coverage.

2017-S2270 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S2270

 TITLE OF BILL :  An act to amend the insurance law and the public
health law, in relation to notification of termination of group health
insurance

 PURPOSE :

This bill seeks to protect employees and others covered under group
health insurance policies or plans against lapses in their insurance
coverage, by requiring timely notice if their coverage is being
terminated.

 SUMMARY OF PROVISIONS :

This bill adds new Insurance Law § 3221(a) (17), Insurance Law § 4305,
and Public Health Law § 4407-a, to require an insurance company,
whether for profit or non-profit, or health maintenance organization,
at the policyholder's expense, to notify those who are insured or
covered ("certificate holders" or "members") under a policy of group
health insurance or plan when such policy or plan is being terminated.
The bill requires policyholders to provide their insurance companies
or health maintenance organizations with the names and addresses of
each enrollee annually. The insurer or health maintenance organization
need not provide notice of the pending termination of coverage if the
policyholder has provided such notice to the insured or covered person

or obtained replacement coverage.  The bill also provides that the
termination of insurance cannot take effect until 30 days after the
notice is sent.

This bill would take effect on the 90th day following enactment.

 EXISTING LAW :

Insurance Law SS 3221 and 4305 currently provide a right to convert to
an individual policy of health and accident insurance without
producing evidence of insurability and without a gap in coverage, to
persons who lose their coverage under a group health insurance policy.
Labor Law 5195 and 217 require employers to notify each certificate
holder (i.e. insured employee) of termination of the policy.

 JUSTIFICATION :

The loss of health insurance coverage can have a devastating impact on
insureds and their families. Individuals who lose such coverage are
forced to decide between delaying necessary medical care and thereby
potentially jeopardizing their health, or spending their savings or
incurring substantial debt to cover expensive medical treatments.
There is particular hardship when individuals believe that they have
health coverage through a group health insurance policy or health
maintenance organization, only to learn too late that the payment of
premiums has stopped and the coverage has consequently been
terminated.

The New York State Legislature addressed this problem in 1987 when it
amended Insurance Law § 3221 to extend the right to convert to an
individual health and accident insurance policy to situations where
coverage is lost because the policyholder (e.g., the employer or a
professional association) failed to pay premiums or took some other
action resulting in the termination of the group policy. In addition,
insurance Law 4305 provides a similar right to convert where coverage
provided by a nonprofit insurance company is terminated for any reason
whatsoever. To facilitate the exercise of this right, Insurance Law §
4235 and regulations (11 NYCRR 55.2) require the insurance carrier or
health maintenance organization to provide notice of termination to
the policyholder, and Labor Law §§ 195 and 217 require employers to
notify each certificate holder or member (i.e. insured or covered
employees).

Unfortunately, these statutes and regulations do not provide
sufficient protections. In particular, the requirement that employers
notify each certificate holder under Labor Law § 217 may be preempted
by the Employee Retirement Income Security Act of 1974 (ERISA) SEE
HOWARD V. GLEASON CORPORATION, 901 F.2d 1154 (2nd Cir. 1990). In
addition, there have been many instances in which defaulting employers
do not notify their employees of impending insurance or plan
termination as a result of the employer's failure to make health
insurance premium payments or failure to remit to the insurance
company or health maintenance organization premiums that have been
deducted from employees' wages. When insured or covered employees in
such cases do not have timely knowledge of the termination of their
group coverage, they may fail to exercise their right to convert to an
individual policy, which may be exercised only up to 45 days from
termination.

This problem is compounded by the insurance industry practice of
"carrying" employers and other policyholders who are experiencing
temporary difficulties, for varying periods, depending upon the
carrier's assessment of their basic soundness. Although this practice
salvages some policies from immediate cancellation, since eventual
cancellations for non-payment are' retroactive to the last period of
payment, claims filed during the "grace" period are not honored.
Moreover, by the time the insured discovers the cancellation, the
privilege to convert may have lapsed. By this time the policy holder
may no longer be functioning or solvent, and the individual formerly
insured is left unprotected, possibly with unreimbursed medical bills
and nowhere to look for recourse.

This bill addresses this problem by requiring insurance companies and
health maintenance organizations to notify insured or covered
employees at the policyholder's expense, when coverage is being
canceled. The insurer or health maintenance organization will not be
required to provide notice if the policyholder has already advised
those insured or covered of the termination, or, if the insured or
covered person is represented by a labor organization, has provided
the representative of such labor organization with such notice, or has
notified the insured or covered person that a replacement insurance
company will be providing similar coverage. In addition, the bill
provides that the termination of insurance or coverage cannot take
effect until 30 days after the notice is sent.

The Legislature has recognized the vital importance of continued
health insurance coverage and has already declared that the public
interest requires notification to employees of any termination of
their group health insurance or coverage so that alternate coverage
can be secured. However, as experience has demonstrated, defaulting
employers suffering serious financial reverses or other adverse
circumstances may fail, or choose not to do so. Moreover, it is
appropriate to mandate that notice be provided to all of those insured
or covered under all group policies or plans. This bill will provide
an alternative method for workers to learn about the pending
termination of their insurance coverage or plan, and will help to
ensure that no one covered under group insurance policies or group
plans loses coverage without notice and an opportunity to timely
exercise their conversion privilege.

 LEGISLATIVE HISTORY :

2015-16:S.1932/A.2649-Referred to Insurance
2013-14:S.2695/A.640-Referred to Insurance
2011-12:S.1167/A.2006-Referred to Insurance
2009-10:S.8197/A.6647A-Referred to Rules/Referred to Insurance
2008-09:A.7780-Passed Assembly
2006-07:S.6017/A.7780-Died in Senate/Passed Assembly
2004-05:S.5044/A.8516-Died in Senate/Passed/Passed Assembly
2003-04:S.5044/A.8517-Died in Senate/Passed Assembly
Similar legislation was introduced in 2001-2002, as S.5170/A.8577.

 FISCAL IMPLICATIONS :

There are no fiscal implications.

 EFFECTIVE DATE :
This bill takes effect on ninetieth day following the date on which it
becomes law.

2017-S2270 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2270
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             January 12, 2017
                                ___________
 
 Introduced  by  Sen.  PARKER -- read twice and ordered printed, and when
   printed to be committed to the Committee on Insurance
 
 AN ACT to amend the insurance law and the public health law, in relation
   to notification of termination of group health insurance
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subsection  (a)  of  section 3221 of the insurance law is
 amended by adding a new paragraph 17 to read as follows:
   (17) (A) THAT THE INSURER SHALL REQUIRE THE POLICYHOLDER TO PROVIDE IT
 WITH THE NAMES AND RESIDENTIAL ADDRESSES OF ALL INDIVIDUALS WHO  BECAUSE
 OF  THEIR  EMPLOYEE  OR  MEMBERSHIP STATUS ARE CERTIFICATE HOLDERS UNDER
 SUCH POLICY, AND TO UPDATE SUCH INFORMATION AT LEAST  ANNUALLY;  AND  IN
 THE  EVENT  THE  INSURER TERMINATES SUCH POLICY, SHALL GIVE EACH CERTIF-
 ICATE HOLDER AT LEAST THIRTY DAYS PRIOR WRITTEN NOTICE OF TERMINATION OF
 COVERAGE, BY MAILING  SUCH  NOTICE  TO  THE  LAST  PROVIDED  RESIDENTIAL
 ADDRESS FOR SUCH CERTIFICATE HOLDER; PROVIDED, HOWEVER, THAT SUCH NOTICE
 SHALL  NOT  BE  REQUIRED  WHERE  THE POLICYHOLDER HAS: (1) PROVIDED SUCH
 CERTIFICATE HOLDER AT LEAST THIRTY DAYS  PRIOR  WRITTEN  NOTICE  OF  THE
 TERMINATION OF COVERAGE, BY MAILING SUCH NOTICE TO THE CERTIFICATE HOLD-
 ER'S  LAST  KNOWN  RESIDENTIAL ADDRESS, OR, IF THE CERTIFICATE HOLDER IS
 REPRESENTED BY A LABOR ORGANIZATION, PROVIDED THE REPRESENTATIVE OF SUCH
 LABOR ORGANIZATION WITH SUCH WRITTEN NOTICE, OR (2) HAS CONTRACTED  WITH
 ANOTHER  INSURER  TO  PROVIDE  SIMILAR COVERAGE FOR THE SAME CERTIFICATE
 HOLDERS, AND HAS PROVIDED CERTIFICATE  HOLDERS  WITH  THE  NAME  OF  THE
 SUBSTITUTED  INSURER.  NO  TERMINATION  OF A GROUP POLICY OR CONTRACT OF
 HEALTH, OR ACCIDENT AND HEALTH INSURANCE SHALL  BECOME  EFFECTIVE  UNTIL
 THIRTY DAYS AFTER THE MAILING OF SUCH NOTICE OF TERMINATION CONTRACT, IF
 REQUIRED.
   (B) THE INSURER SHALL INCLUDE WITH SUCH NOTICE A COMPLETE STATEMENT OF
 THE RIGHTS OF THE CERTIFICATE HOLDER UNDER THE TERMINATION OF THE POLICY
 AS  TO  COVERAGE  FOR ILLNESS, ACCIDENT AND TREATMENT OCCURRING PRIOR TO
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD06674-01-7

 S. 2270                             2
 
 AND SUBSEQUENT TO THE TERMINATION DATE, AND SUCH OTHER RIGHTS OF CERTIF-
 ICATE HOLDERS AS MAY EXIST UNDER THE CONTRACT OR POLICY OR  PURSUANT  TO
 PARAGRAPH ONE OF SUBSECTION (E) OF THIS SECTION.
   (C)  UPON  WRITTEN  REQUEST, THE HOLDER OF THE POLICY BEING TERMINATED
 SHALL REIMBURSE THE INSURER FOR ALL REASONABLE AND NECESSARY COSTS ASSO-
 CIATED WITH PROVIDING SUCH NOTICE TO CERTIFICATE HOLDERS.
   § 2. Section 4305 of the insurance law is  amended  by  adding  a  new
 subsection (n) to read as follows:
   (N) (1) A GROUP CONTRACT ISSUED PURSUANT TO THIS SECTION SHALL CONTAIN
 A  PROVISION THAT THE INSURER SHALL REQUIRE THE GROUP CONTRACT HOLDER TO
 PROVIDE IT WITH THE NAMES AND RESIDENTIAL ADDRESSES OF  ALL  INDIVIDUALS
 WHO BECAUSE OF THEIR EMPLOYEE OR MEMBERSHIP STATUS ARE CERTIFICATE HOLD-
 ERS UNDER SUCH POLICY, AND TO UPDATE SUCH INFORMATION AT LEAST ANNUALLY;
 AND  IN  THE  EVENT  THE INSURER TERMINATES SUCH POLICY, SHALL GIVE EACH
 CERTIFICATE HOLDER AT LEAST THIRTY DAYS PRIOR WRITTEN NOTICE  OF  TERMI-
 NATION OF COVERAGE, BY MAILING SUCH NOTICE TO THE LAST PROVIDED RESIDEN-
 TIAL  ADDRESS  FOR SUCH CERTIFICATE HOLDER; PROVIDED, HOWEVER, THAT SUCH
 NOTICE SHALL NOT BE REQUIRED  WHERE  THE  GROUP  POLICYHOLDER  HAS:  (A)
 PROVIDED  SUCH  CERTIFICATE  HOLDERS  AT LEAST THIRTY DAYS PRIOR WRITTEN
 NOTICE OF THE TERMINATION OF COVERAGE, BY MAILING SUCH  NOTICE  TO  SUCH
 CERTIFICATE HOLDER'S LAST KNOWN RESIDENTIAL ADDRESS, OR, IF SUCH CERTIF-
 ICATE HOLDER IS REPRESENTED BY A LABOR ORGANIZATION, PROVIDED THE REPRE-
 SENTATIVE  OF  SUCH  LABOR ORGANIZATION WITH SUCH WRITTEN NOTICE, OR (B)
 HAS CONTRACTED WITH ANOTHER INSURER TO PROVIDE SIMILAR COVERAGE FOR  THE
 SAME CERTIFICATE HOLDERS, AND HAS PROVIDED SUCH CERTIFICATE HOLDERS WITH
 THE NAME OF THE SUBSTITUTED INSURER. NO TERMINATION OF A GROUP POLICY OR
 CONTRACT OF HEALTH, OR ACCIDENT AND HEALTH INSURANCE SHALL BECOME EFFEC-
 TIVE  UNTIL  THIRTY DAYS AFTER THE MAILING OF SUCH NOTICE OF TERMINATION
 CONTRACT, IF REQUIRED.
   (2) THE INSURER SHALL INCLUDE WITH SUCH NOTICE A COMPLETE STATEMENT OF
 THE RIGHTS OF THE CERTIFICATE HOLDER UNDER THE TERMINATION OF THE POLICY
 AS TO COVERAGE FOR ILLNESS, ACCIDENT AND TREATMENT  OCCURRING  PRIOR  TO
 AND SUBSEQUENT TO THE TERMINATION DATE, AND SUCH OTHER RIGHTS OF CERTIF-
 ICATE  HOLDERS  AS MAY EXIST UNDER THE CONTRACT OR POLICY OR PURSUANT TO
 PARAGRAPH ONE OF SUBSECTION (D) OF THIS SECTION.
   (3) UPON WRITTEN REQUEST, THE HOLDER OF THE GROUP POLICY BEING  TERMI-
 NATED SHALL REIMBURSE THE INSURER FOR ALL REASONABLE AND NECESSARY COSTS
 ASSOCIATED WITH PROVIDING SUCH NOTICE TO CERTIFICATE HOLDERS.
   §  3.  The public health law is amended by adding a new section 4407-a
 to read as follows:
   § 4407-A. GROUP CONTRACTS; NOTIFICATION OF CANCELLATION  REQUIREMENTS.
 1.  A  HEALTH  MAINTENANCE  ORGANIZATION SHALL REQUIRE A POLICYHOLDER TO
 PROVIDE IT WITH THE NAMES AND RESIDENTIAL ADDRESSES OF  ALL  INDIVIDUALS
 WHO  BECAUSE  OF THEIR EMPLOYEE OR MEMBERSHIP STATUS ARE MEMBERS IN SUCH
 HEALTH MAINTENANCE ORGANIZATION, AND TO UPDATE SUCH INFORMATION AT LEAST
 ANNUALLY; AND IN THE EVENT THE HEALTH  MAINTENANCE  ORGANIZATION  TERMI-
 NATES  SUCH  POLICY,  SHALL  GIVE  EACH SUCH MEMBER AT LEAST THIRTY DAYS
 PRIOR WRITTEN NOTICE OF TERMINATION OF COVERAGE, BY MAILING SUCH  NOTICE
 TO  THE  LAST  PROVIDED  RESIDENTIAL  ADDRESS FOR SUCH MEMBER; PROVIDED,
 HOWEVER, THAT SUCH NOTICE SHALL NOT BE REQUIRED WHERE  THE  POLICYHOLDER
 HAS:  (A) PROVIDED SUCH MEMBER AT LEAST THIRTY DAYS PRIOR WRITTEN NOTICE
 OF THE TERMINATION OF COVERAGE, BY MAILING SUCH NOTICE TO SUCH  MEMBER'S
 LAST  KNOWN  RESIDENTIAL  ADDRESS, OR, IF THE MEMBER IS REPRESENTED BY A
 LABOR ORGANIZATION, PROVIDED THE REPRESENTATIVE OF SUCH LABOR  ORGANIZA-
 TION WITH SUCH WRITTEN NOTICE, OR (B) HAS CONTRACTED WITH ANOTHER HEALTH
 MAINTENANCE  ORGANIZATION OR INSURER TO PROVIDE SIMILAR COVERAGE FOR THE

 S. 2270                             3
 
 SAME MEMBERS, AND HAS PROVIDED MEMBERS WITH THE NAME OF THE  SUBSTITUTED
 HEALTH  MAINTENANCE  ORGANIZATION  OR INSURER. NO TERMINATION OF A GROUP
 POLICY OR CONTRACT OF HEALTH, OR ACCIDENT  AND  HEALTH  INSURANCE  SHALL
 BECOME  EFFECTIVE  UNTIL THIRTY DAYS AFTER THE MAILING OF SUCH NOTICE OF
 TERMINATION CONTRACT, IF REQUIRED.
   2. THE HEALTH MAINTENANCE ORGANIZATION SHALL INCLUDE WITH SUCH  NOTICE
 A  COMPLETE  STATEMENT OF THE RIGHTS OF THE MEMBER UNDER THE TERMINATION
 OF THE POLICY AS TO COVERAGE FOR ILLNESS, ACCIDENT AND TREATMENT  OCCUR-
 RING  PRIOR  TO  AND  SUBSEQUENT TO THE TERMINATION DATE, AND SUCH OTHER
 RIGHTS OF MEMBERS AS MAY EXIST UNDER THE CONTRACT OR POLICY OR  PURSUANT
 TO THIS ARTICLE AND ARTICLE FORTY-THREE OF THE INSURANCE LAW.
   3.  UPON  WRITTEN  REQUEST,  THE HOLDER OF THE POLICY BEING TERMINATED
 SHALL REIMBURSE THE HEALTH MAINTENANCE ORGANIZATION FOR  ALL  REASONABLE
 AND NECESSARY COSTS ASSOCIATED WITH PROVIDING SUCH NOTICE TO MEMBERS.
   §  4.  This  act shall take effect on the ninetieth day after it shall
 have become a law.

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