NY State Senate Bill 2019-S5161

Senate Bill S5161

2019-2020 Legislative Session

Relates to the definition of small group for the purposes of health insurance policies and contracts; repealer

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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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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2020	referred to insurance
Apr 11, 2019	referred to insurance

co-Sponsors

2019-S5161 (ACTIVE) - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §§3231 & 4317, Ins L; rpld §7, Chap 12 of 2016
Versions Introduced in Other Legislative Sessions:: 2015-2016: S7104
2017-2018: S425
2021-2022: S3567

2019-S5161 (ACTIVE) - Summary

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.

2019-S5161 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5161

SPONSOR: BRESLIN
 
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)(1) to harmonize the
provisions of such subsection with the definition of "small group."

Section 4 amends insurance law section 4317(a) ( I) 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 1, 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 employ-
ees or members, to conform with the federal ACA definition, effective
January 1, 2016.

This expansion 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 deduc-
tibles 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 expan-
sion 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:

S.425 of 2018 S.7104 of 2016.

 
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 1 of subsection(h) of section 3231, and
paragraph I of subsection (d) and paragraph I 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.

2019-S5161 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5161
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                              April 11, 2019
                                ___________
 
 Introduced  by  Sens. BRESLIN, SEWARD -- 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  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
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph 1 of subsection (a) of section 3231 of the insur-
 ance law, as amended by section 69 of part D of chapter 56 of  the  laws
 of 2013, is amended to read as follows:
   (1)  No  individual health insurance policy and no group health insur-
 ance policy covering between one and fifty employees or members  of  the
 group  [or between one and one hundred employees or members of the group
 for policies issued or renewed on or after January first,  two  thousand
 sixteen] exclusive of spouses and dependents, hereinafter referred to as
 a  small  group,  providing  hospital and/or medical benefits, including
 medicare supplemental insurance, shall be issued in  this  state  unless
 such policy is community rated and, notwithstanding any other provisions
 of  law, the underwriting of such policy involves no more than the impo-
 sition of a pre-existing condition limitation if otherwise permitted  by
 this article.
   §  2.  Paragraph  3 of subsection (a) of section 3231 of the insurance
 law, as amended by section 69 of part D of chapter 56  of  the  laws  of
 2013, is amended to read as follows:
   (3) Once accepted for coverage, an individual or small group cannot be
 terminated  by  the insurer due to claims experience.  Termination of an
 individual or small group shall be based only on  one  or  more  of  the
 reasons  set  forth  in  subsection  (g)  of  section three thousand two
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD08894-01-9

 S. 5161                             2
 
 hundred sixteen or subsection (p) of section three thousand two  hundred
 twenty-one  of  this  article.  Group  hospital and/or medical coverage,
 including medicare supplemental insurance, obtained through  an  out-of-
 state  trust  covering  a group of fifty or fewer employees, [or between
 one and one hundred employees for policies issued or renewed on or after
 January first, two thousand sixteen,] or participating persons  who  are
 residents  of this state must be community rated regardless of the situs
 of delivery of the policy. Notwithstanding any other provisions of  law,
 the  underwriting of such policy may involve no more than the imposition
 of a pre-existing condition limitation if permitted by this article, and
 once accepted for coverage, an  individual  or  small  group  cannot  be
 terminated  due  to  claims  experience. Termination of an individual or
 small group shall be based only on one or more of the reasons set  forth
 in  subsection  (p)  of section three thousand two hundred twenty-one of
 this article.
   § 3. Paragraph 1 of subsection (h) of section 3231  of  the  insurance
 law, as amended by chapter 12 of the laws of 2016, is amended to read as
 follows:
   (1)  Notwithstanding  any other provision of this chapter, no insurer,
 subsidiary of an insurer, or controlled  person  of  a  holding  company
 system may act as an administrator or claims paying agent, as opposed to
 an  insurer,  on  behalf of small groups which, if they purchased insur-
 ance, would be subject to this section.  No  insurer  may  provide  stop
 loss,  catastrophic  or  reinsurance  coverage to small groups which, if
 they purchased insurance, would be subject to this  section.  [Provided,
 however,  the  provisions  of this paragraph shall not apply to: (A) the
 renewal of stop loss, catastrophic or reinsurance coverage issued and in
 effect on January first, two thousand fifteen to small  groups  covering
 between fifty-one and one hundred employees or members of the group; and
 (B)  the issuance between January first, two thousand sixteen and Decem-
 ber thirty-first, two thousand sixteen, of stop  loss,  catastrophic  or
 reinsurance coverage, and any renewal thereof, to a small group covering
 between  fifty-one  and  one  hundred employees or members of the group,
 provided that such group had  stop  loss,  catastrophic  or  reinsurance
 coverage issued and in effect on January first, two thousand fifteen.]
   §  4.  Paragraph  1 of subsection (a) of section 4317 of the insurance
 law, as amended by section 72 of part D of chapter 56  of  the  laws  of
 2013, is amended to read as follows:
   (1) No individual health insurance contract and no group health insur-
 ance contract covering between one and fifty employees or members of the
 group, [or between one and one hundred employees or members of the group
 for  policies  issued or renewed on or after January first, two thousand
 sixteen] exclusive of spouses and dependents,  including  contracts  for
 which the premiums are paid by a remitting agent for a group, hereinaft-
 er referred to as a small group, providing hospital and/or medical bene-
 fits, including Medicare supplemental insurance, shall be issued in this
 state  unless  such contract is community rated and, notwithstanding any
 other provisions of law, the underwriting of such contract  involves  no
 more  than  the  imposition  of  a  pre-existing condition limitation if
 otherwise permitted by this article.
   § 5. Paragraph 1 of subsection (e) of section 4317  of  the  insurance
 law, as amended by chapter 12 of the laws of 2016, is amended to read as
 follows:
   (1)  Notwithstanding  any other provision of this chapter, no insurer,
 subsidiary of an insurer, or controlled  person  of  a  holding  company
 system may act as an administrator or claims paying agent, as opposed to

 S. 5161                             3
 
 an  insurer,  on  behalf of small groups which, if they purchased insur-
 ance, would be subject to this section.  No  insurer  may  provide  stop
 loss,  catastrophic  or  reinsurance  coverage to small groups which, if
 they  purchased  insurance, would be subject to this section. [Provided,
 however, the provisions of this paragraph shall not apply  to:  (A)  the
 renewal of stop loss, catastrophic or reinsurance coverage issued and in
 effect  on  January first, two thousand fifteen to small groups covering
 between fifty-one and one hundred employees or members of the group; and
 (B) the issuance between January first, two thousand sixteen, and Decem-
 ber thirty-first, two thousand sixteen, of stop  loss,  catastrophic  or
 reinsurance coverage, and any renewal thereof, to a small group covering
 between  fifty-one  and  one  hundred employees or members of the group,
 provided that such group had  stop  loss,  catastrophic  or  reinsurance
 coverage issued and in effect on January first, two thousand fifteen.]
   §  6.  Paragraph  1 of subsection (g) of section 3231 of the insurance
 law, as amended by chapter 12 of the laws of 2016, is amended to read as
 follows:
   (1) [(A)] This section shall also apply to policies issued to a  group
 defined  in  subsection (c) of section four thousand two hundred thirty-
 five of this chapter, including but not limited  to  an  association  or
 trust  of  employers, if the group includes one or more member employers
 or other member groups having [one hundred] FIFTY or fewer employees  or
 members  exclusive  of  spouses  and  dependents. For a policy issued or
 renewed on or after January first, two thousand fourteen, if  the  group
 includes  one or more member small group employers eligible for coverage
 subject to this section, then such member employers shall be  classified
 as  small  groups for rating purposes and the remaining members shall be
 rated consistent with the rating  rules  applicable  to  such  remaining
 members  pursuant to paragraph two of this subsection. [(B) Subparagraph
 A of this paragraph shall not apply to either the renewal  of  a  policy
 issued  to  a group or the issuance, between January first, two thousand
 sixteen and December thirty-first, two thousand sixteen,  of  a  policy,
 and  any  renewal thereof, to a group, provided that the following three
 requirements are met: (I) the group had been issued a policy that was in
 effect on July first, two thousand fifteen; (II) the  group  had  member
 employers,  who,  on  or  after  July  first, two thousand fifteen, have
 between fifty-one and one hundred employees, exclusive  of  spouses  and
 dependents; and (III) the group is either: (i) comprised entirely of one
 or  more  municipal corporations or districts (as such terms are defined
 in section one hundred nineteen-n of the general municipal law); or (ii)
 comprised entirely of nonpublic schools providing education in any grade
 from pre-kindergarten through twelfth grade.]
   § 7. Paragraph 1 of subsection (d) of section 4317  of  the  insurance
 law, as amended by chapter 12 of the laws of 2016, is amended to read as
 follows:
   (1)  [(A)]  This  section  shall  also apply to a contract issued to a
 group defined in subsection (c) of section  four  thousand  two  hundred
 thirty-five of this chapter, including but not limited to an association
 or  trust of employers, if the group includes one or more member employ-
 ers or other member groups having [one hundred] FIFTY or fewer employees
 or members exclusive of spouses and dependents. For a contract issued or
 renewed on or after January first, two thousand fourteen, if  the  group
 includes  one or more member small group employers eligible for coverage
 subject to this section, then such member employers shall be  classified
 as  small  groups for rating purposes and the remaining members shall be
 rated consistent with the rating  rules  applicable  to  such  remaining

 S. 5161                             4
 
 members  pursuant to paragraph two of this subsection. [(B) Subparagraph
 A of this paragraph shall not apply to either the renewal of a  contract
 issued  to  a group or the issuance, between January first, two thousand
 sixteen  and December thirty-first, two thousand sixteen, of a contract,
 and any renewal thereof, to a group, provided that the  following  three
 requirements  are met: (I) the group had been issued a contract that was
 in effect on July first, two thousand fifteen; (II) the group had member
 employers, who, on or after  July  first,  two  thousand  fifteen,  have
 between  fifty-one  and  one hundred employees, exclusive of spouses and
 dependents; and (III) the group is either: (i) comprised entirely of one
 or more municipal corporations or districts (as such terms  are  defined
 in section one hundred nineteen-n of the general municipal law); or (ii)
 comprised entirely of nonpublic schools providing education in any grade
 from pre-kindergarten through twelfth grade.]
   § 8. 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, is REPEALED.
   §  9.  This  act shall take effect immediately; provided, however that
 the amendments to paragraph 1 of  subsection  (g)  and  paragraph  1  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  six,  three, seven and five of this act respectively shall
 not affect the expiration and reversion of  such  paragraphs  and  shall
 expire and be deemed repealed therewith.

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Senate Bill S5161

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Sponsored By

Neil D. Breslin