Relates to group life and group accident and health insurance policies

Summary of specific 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 50% of eligi- ble employees or five, whichever is fewer. This bill would also make a similar amendment to subparagraph (A) of paragraph (1) of subsection (c) of section 4235 of the insurance 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 for all other types of group accident and health insurance (disability, long term care, vision, dental, etc.).

Current provisions

For both group life and group accident and health insurance contracts, current law establishes that such contract should cover not less than fifty percent or, if less, fifty or more of such eligible employees.

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 cover- age. 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 advantages of payroll deduction, limited underwriting and other effi- ciencies in administration that can oftentimes lead to cheaper insurance premiums for the employee.

In looking at how best to meet the demands of the marketplace, it was determined that certain restrictions in the group laws of several states, including New York, created an impediment to a number of other- wise 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 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 of a suffi- cient size in order to qualify for group coverage.

By doing this, the law will enable more coverage of this type to be issued in the group setting and, consequently, more state residents to have such coverage. The more people who have group life, disability income and long term care insurance, the fewer who may need public assistance in times of hardship.

Prior legislative history

2008: S.7766

Fiscal implications

No known costs to the State are associated with this bill.

Effective date

This act shall take effect immediately.