Relates to the discontinuance of a class of group of blanket policy or contract of hospital, surgical or medical expense insurance and relates to a marketplace withdrawal

The purpose of this bill is to amend the Insurance Law to require discontinuances of particular classes of group or blanket policies of hospital, surgical or medical expense insurance to occur at the time of coverage renewal and also to require insurers discontinuing hospital, surgical or medical expense insurance offered in the small or large group market to provide a written plan that is acceptable to the Superintendent of Financial Services (Superintendent) to minimize potential disruption in the marketplace.

Summary of Provisions:

Sections 1 and 5 of the bill would amend insurance Law 3221(p)(3)(A) and 4305(j)(3)(A) to require that a class discontinuance of a group or blanket policy or contract of hospital, surgical or medical expense insurance only may occur at the time of coverage renewal unless the Superintendent determines that continuation of the policy or contract would jeopardize the insurer's solvency, continuation of the policy or contract would not be in the best interests of the policyholders or contract holders and member insureds or the public, discontinuance is necessary to permit the insurer to standardize its policy or contract forms or another date is necessary in order to effectuate an orderly discontinuance.

Sections 2 and 6 of the bill would add a new Insurance Law 3221(p)(3)(A)(v) and 4305(j)(3)(A)(v) to require insurers discontinuing a particular class of group or blanket policy or contract of hospital, surgical or medical expense insurance offered in the small or large group market to provide a written plan that is acceptable to the Superintendent to minimize potential disruption in the marketplace.

Sections 3 and 7 of the bill amend Insurance Law §§ 3221(p)(3)(E) and 4305(j)(3)(E) to require that a discontinuance of all hospital, surgical or medical expense insurance offered in the small or large group market, or both markets, in New York, only may occur at the time of coverage renewal, unless the Superintendent determines that continuation of the policy or contract would jeopardize the insurer's solvency, continuation of the policy or contract would not be in the best interests of the policyholders or contract holders and member insureds or the public or another date is necessary in order to effectuate an orderly discontinuance.

Sections 4 and 8 of the bill would amend Insurance Law 3221(p)(3)(E)(iii) and 4305(j)(3)(E)(iii) to clarify that the written plan to minimize potential disruption in the marketplace submitted by insurers electing to discontinue offering all hospital, surgical or medical expense insurance offered in the small or large group market,

or both markets, in New York, must be acceptable to the Superintendent.

Section 9 of the bill would provide that the bill take effect immediately.

Existing Law: Insurance Law §§ 3221 and 4305 allow insurers to discontinue a class of policies by providing written notice to each policyholder or contract holder (and to all employees and member insureds covered under such coverage) of such discontinuance at least 90 days prior to the date of discontinuance of such coverage. The law is silent as to when such discontinuance may be effectuated.

These provisions also allow insurers to discontinue offering such insurance in the small or large group market, or both markets, in New York, by providing written notice to the Superintendent and each policyholder or contract holder (and to all employees and member insureds covered under such coverage) of such discontinuance at least 180 days prior to the date of discontinuance of such coverage. The law is silent as to when such discontinuance may be effectuated. They further require insurers to provide the Superintendent with a written plan to minimize potential disruption in the marketplace.

Prior Legislative History:

This is a new bill.

Statement in Support: A class discontinuance has the potential to cause disruption in the marketplace if large numbers of groups and member insureds must find replacement coverage as of the same date from a limited number of insurers. Those insurers may not be able to readily absorb a large influx of new groups and member insureds enrolling at the same time, and their policies and contracts may not be priced to take into account such a large increase in member insureds. Their provider networks may not be able to serve adequately the increased number of member insureds.

Moreover, persons losing benefits as a result of a discontinuance implemented on a single date will lose those benefits much sooner than if the discontinuance is required to be implemented at the time of coverage renewal. Currently, the law is silent as to when insurers may terminate the coverage. This bill would reduce market disruption by clarifying that insurers seeking to discontinue policies do so on a rolling basis as the group and blanket policies come up for renewal. This bill also would protect consumers with high deductible coverage from having their coverage discontinued in the middle of a plan year and possibly losing credits for the expenses that have been applied already toward satisfying their deductible. Consumers will be protected by ensuring their coverage will continue through the end of the policy year.

However, the bill also gives the Superintendent the ability to address the circumstances where the Superintendent determines that continuation of the policies would jeopardize the insurer's solvency, continuation of the policies would not be in the best interests of the policyholders and member insureds of the insurer or the public, discontinuance is necessary to permit the insurer to standardize its

policy forms or another date is necessary in order to effectuate an orderly discontinuance.

The bill further requires insurers to submit an acceptable written plan before discontinuing coverage in order to minimize potential disruption in the marketplace. The plan will provide the Superintendent with the particulars of how the discontinuance will impact the insurer, its member insureds and the small or large group health insurance market in New York. It will also enable the Superintendent to assess factors such as the number of affected groups and insured members, the geographic area impacted, the availability of replacement coverage and to determine the least disruptive dates upon which the insurer may implement the discontinuance.

In addition, a market withdrawal, where insurers elect to discontinue offering all hospital; surgical or medical expense insurance offered in the small or large group market, or both markets, also has the potential to cause disruption in the marketplace. Currently, the law is silent as to when insurers may terminate the coverage. This bill would minimize such a market disruption by clarifying that insurers seeking to withdraw from the small group market, large group market, or both markets, in New York, must do so on a rolling basis as policies come up for renewal. It also would make the statutory sections regarding market withdrawals and class discontinuances consistent in that regard.

Insurers electing to discontinue offering all hospital, surgical or medical expense insurance offered in the small or large group market, or both markets, are already required to provide the Superintendent with a written plan to minimize potential disruption in the marketplace. This bill clarifies that the plan must be acceptable to the Superintendent.

Fiscal Implications: None to the State.

Effective Date: This bill would take effect immediately.