Relates to group life and group accident and health insurance policies

Title of bill

An act to amend the insurance law, in relation to group life and group accident and health insurance policies

Purpose or general idea of bill

This bill would amend §§4216 and 4235 of the Insurance Law to revise certain provisions relating to requisite minimum participation requirements by employees in group life and certain group accident and health insurance contracts. This bill would also remove current restrictions on the sub-selections that may be made by employers when establishing group life and group accident and health insurance plans.

Summary of provisions

This bill would amend paragraph (1) of subsection (b) of section 4216 of the Insurance Law to: reduce the minimum number of eligible employees that must be insured under a group life insurance plan to two and; to eliminate certain restrictions on the amount of sub-selections that may be offered under a group life insurance plan. This bill would also make a similar amendment to subparagraph (A) of paragraph (1) of subsection (c) of section 4235 of the Insurance Law relating to group accident and health insurance, with the exception being that the current minimum group participation requirements will continue for hospital, medical, major medical or similar comprehensive type expense reimbursed coverage but will be reduced to two for all other types of group accident and health insurance (disability, long term care, vision, dental, etc.).

Justification

In recent years, employee benefits have changed significantly. There was a time when employers paid a substantial portion or even all of the cost of employee benefits. Many corporations still do but, due to the increasing burden of insurance costs, employers of all sizes have also been forced to reduce their contributions to the benefit plans offered to their employees, in order to continue to afford such employee coverage. Employees have increasingly been asked to share. these costs with their employer. Today, 25% of the group life insurance market is fully voluntary, in that the employee elects coverage and may pay some or all of the premiums for such coverage. By offering these voluntary products through an employer group, the employer can offer their employees the advantage of payroll deduction, limited underwriting and other efficiencies in administration that can often times lead to cheaper insurance premiums for the employee.

In looking at how best to meet the demands of the marketplace, in particular to small businesses, it was determined that certain restrictions in the group laws of several states, including New York, created an impediment to a number of otherwise common group offerings. These provisions, written many years ago for a purpose that no longer exists (to protect insurers from adverse selection in the underwriting process), restrict employee access to voluntary coverage. Given the realities of today's employer group market, these outdated laws are ill-suited to protect and benefit consumers.

This bill would remove these impediments and create the ability for insurers to tailor more attractive and available group coverage for employers and employees in New York. It would allow insurers to offer group coverage to as little as 2 employees of any employer who elect to take part in a group life, disability income, long term care, vision or dental policy by removing the current restriction that the group must be an arbitrary size to offer such coverage.

Prior legislative history

2008: S.7766 FISCAL IMPLICATIONS : No known costs to the State are associated with this bill.

EFFECTIVE DATE .up off; : This act shall take effect immediately.