Provides for short term health insurance policies for persons who have lost coverage under a parent's policy and are otherwise not eligible for coverage

Section two adds a new Section 3216-a to the Insurance Law to authorize an insurer to offer a short-term health insurance policy to an eligible individual. An "eligible individual" is an unmarried resident of New York who is between 19 and 26 and is either a recent college graduate or has lost dependent eligibility under his patent's policy and who, is not eligible for coverage under an employer's plan. A short-term health insurance policy is required to have a defined term not to exceed twenty four months and must be community rated and open enrolled. The community rate, however, tan be derived by considering only the pool of risks covered by the policy. This section also establishes the minimum benefits and maximum cost sharing amounts for a short term health insurance policy.

Section three amends Section 4304 of the Insurance Law to provide an exception to the prohibition against an Article 43 corporation offering major medical, comprehensive or comparable coverage in the individual market that does not mirror the out-of-network benefits of the standardized direct payment HMO/POS contracts when the coverage is a short-term subscriber contract.

Section four adds a new Section 4304-a to the Insurance Law to authorize an Article 43 corporation to offer a short-term subscriber contract to an eligible individual. An "eligible individual" is an unmarried resident of New York who is between 19 and 26 and is either a recent college graduate or has lost dependent eligibility under his parent's policy and who, is not eligible for coverage under an employer's plan. A short-term subscriber contract is required to have a defined term not to exceed twenty four months and must be community rated and open enrolled. The community rate, however, can be derived by considering only the pool of risks covered by the policy. This section also establishes the minimum benefits and maximum cost sharing amounts for a short term subscriber contract.

Section five requires the Superintendent of Insurance to report to the Governor, the speaker of the assembly, the temporary president of the senate and the chairs of the insurance committees by April 1, 2013 on the effectiveness of the short-term health insurance policies and subscriber contracts in addressing the number of uninsured young adults and provide his recommendations on whether to continue the program.

Section six provides that the law takes effect immediately and sunsets on December 31, 2014.

Existing law

Sections 4321 and 4322 of the Insurance Law require HMOs to be in the individual market with standardized direct pay HMO and HMO point of service contracts Sections 3216 and 4304 require that individual health insurance policies and subscriber contracts are generally guaranteed renewable at the option of the policyholder Section 3232 and 4317 require individual policies of accident and health insurance and individual subscriber contracts to be offered on a community rated and open enrolled basis. Sections 3232 and 4318 specify the requirements for use of pre-existing condition provisions.

Justification

A report issued by the Commonwealth Fund in May 2006 indicated that the fastest growing segment of uninsured Americans is the nineteen to twenty-nine year olds. Their number grew from 11.2 million to 13.7 million between 2000 and 2004. The same report indicated that two in five college graduates and 50% of high school graduates will be uninsured for at least part of their first year after graduation. Although many of these uninsured might be eligible to continue group coverage through COBRA, purchase individual coverage through the Healthy New York program or apply for a direct pay standardized contract, those options are often too expensive and the young adult will choose to go uninsured. This population is in need of a reasonably priced short term policy to protect them against catastrophic events and to provide temporary security while they explore their employment options. The purpose of this legislation is to give these young adults a reasonably priced alternative to the more expensive options that are currently available to this age group The policy provides a minimum level of provider office care, hospital services and some ancillary services. The legislation is not an insurance mandate. It merely permits insurers and Article 43 corporations the ability to design and offer a policy that might satisfy the needs of this uninsured population. It is being done as a demonstration program to determine its impact on the target population but also to determine its impact on the direct pay market in its entirety.

Legislative history

Vetoed by Governor in 2008 (S.8357, Veto 171

Fiscal implications

None.

Effective date

Immediately, but expires and is deemed repealed on December 31, 2014.