Provides for licensing and regulating health insurance purchasing cooperatives serving sole proprietors and small employers

16 Co-sponsors

• James L. Seward
• John J. Bonacic
• John A. DeFrancisco
• Hugh T. Farley
• John J. Flanagan
• Martin J. Golden
• Kenneth P. LaValle
• Vincent L. Leibell
• Betty Little
• George D. Maziarz
• Thomas P. Morahan
• Michael F. Nozzolio
• Stephen M. Saland
• Dean G. Skelos
• Dale M. Volker
• James S. Alesi

Title of bill

An act to amend the insurance law, in relation to licensing and regulating health insurance purchasing cooperatives

Purpose

The purpose of this bill is to encourage and facilitate the operation of health insurance purchasing cooperatives. Purchasing cooperatives are a new mechanism that allows small businesses to select more than one health insurance carrier for its employees. This will allow employees of small businesses to have the same ability to select among different health plans as is the case with large employers. In addition, it will permit purchasing cooperatives to assist small businesses in its claims processing to help reduce personnel overhead costs of employers.

Summary of provisions

Section 1: Amends Insurance Law section 2101 to define health insurance purchasing cooperatives for the purposes of article 21 of the insurance law which regulates agents and brokers.

Section 2: Creates Insurance Law section 2104-a to provide for the licensing of health insurance purchasing cooperatives. This section delineates the criteria that needs to be satisfied before a purchasing cooperative license is issued. Enumerates the powers that purchasing cooperatives shall have once they are licensed. Among the cooperative's powers shall include, the ability to market, sell, offer or arrange for sale to small employers a variety of health insurance plans, prepare and distribute information on insurance plans and price comparisons, provide premium collection services for small businesses, and provide claims handling services for small businesses so that it can be done by one centralized staff instead of in an ad hoc manner by each small employer.

Sections 3, 4, 5 and 6: Technical conforming amendments to the insurance law that relates to the issuance and suspension of purchasing cooperative licensees, similar to those provisions that apply to insurance agents and Brokers.

Sections 7 and 8: A grandfathering provision so as not to affect purchasing cooperatives that may be in existence pursuant to memorandum of understandings issued by the Insurance Department. The effective date shall be 180 days after this law shall have become a law.

Existing law

Currently, purchasing cooperatives or similar organizations are not explicitly sanctioned by the insurance law, but may exist in a quasi-formal arrangement with an insurance broker under the supervision of the superintendent.

Justification

Throughout this State, small businesses are experiencing significantly increasing costs for the purchase of health insurance and simultaneously a reduction in the number of plans that offer coverage to this segment of the market. This bill should encourage the formation of purchasing cooperatives that can service the needs of small businesses by providing choice of several insurance plans for each employer and its employees and providing claims processing assistance so that small business can rely on an insurance expert to process claims instead of using in-house personnel that in many cases is the business owner or bookkeeper.

Legislative history

S.2187-B of 2001, S.1224-A of 2003/2004, S.79 of 2005/2006, S.202-A of 2007/2008

Fiscal implications

None.

Local fiscal implications

None.

Effective date

180 days after it shall have become law.