Creates the freelancers health plan demonstration program

Summary of provisions

This bill would allow for the continuation of the freelancers demonstration program and permit 25,000 currently insured independent workers to maintain their health benefits through December 2014. The bill is modeled on previously enacted legislation for student health plans sponsored by New York State independent universities and would safeguard members' health coverage by allowing them to move their coverage from Freelancers Insurance Company (FIC), an article 42 licensed insurance company, to a newly created self-insured health fund called Freelancers Health Plan, which would continue to offer eligible Freelancers Union members affordable health benefit plans. Freelancers Health Plan would be regulated by the Department of Financial Services and would be required to follow most of the same rules and regulations as a non-profit health insurer established pursuant to Article 43 of the Insurance law, including complying with stringent consumer protection provisions, minimum reserve requirements and financial reporting. The Plan would offer at least one plan that complies with the ACA metal tier requirements and, upon approval from CMS, its offerings would be considered Minimum Essential Coverage. In addition, the legislation would subject Freelancers Union to the penalties established pursuant to section 109 of the Insurance Law should the Freelancers Union violate the provisions of this bill. The legislation would maintain the existing demonstration program's current sunset date of December 31, 2014.

Justification

In 2009, New York State authorized a demonstration program through 2013 providing health insurance coverage to independent workers, a constituency which historically has had limited access to affordable, comprehensive health benefits. Freelancers Insurance Company (FIC) was created to serve independent workers who, unlike the majority of workers, are unable to access health benefits from a traditional employer. In. 2012, two years after the ACA was enacted, the legislature extended the sunset date to December 31, 2014 to allow FIC members one full year to acclimate to the new landscape created by the ACA. Today, more than 25,000 Freelancers Union members and their dependents receive affordable health insurance from FIC, a health insurance company wholly owned by Freelancers Union. FIC premiums are on average 40% less than plans available in the individual and group markets in New York City and last year FIC had a 0% premium increase across all plans, well below the 9.6% average increase for small group plans in New York State. Additionally, as of November 2012, FIC

members can access free primary care and preventative services through a state of the art medical home located in Downtown Brooklyn.

FIC is currently is licensed as an Article 42 insurance company and as such is regulated by DFS. Effective January 1, 2014, the ACA, as specified in recently promulgated CMS rules, will require health insurers participating in the individual or small group market in a state to offer insurance to all individuals or groups in that state, to offer coverage that fits within narrow actuarial value ranges and to participate in various risk sharing pools. The ACA failed to incorporate any exceptions to these requirements for existing insurance demonstration programs such as FIC that were designed to make affordable coverage available to independent workers with middle incomes. The obligations imposed under the ACA will impose severe hardship on FTC members, jeopardizing their ability to continue to obtain affordable coverage. Most importantly, FIC's actuaries estimate that application of the ACA would force FIC to raise premiums by _%, an average of $178 per member per month.

FTC members are a unique class of New Yorkers who historically have faced difficulty obtaining affordable health coverage. The majority of FIC members are middle class (annual incomes of -$50,000 to $100,000 for a family of four) and all members have no access to health insurance through a traditional employer relationship. They are not positioned favorably to purchase insurance through the exchanges since, as middle income earners, most of them will not be eligible for tax subsidies under the ACA and they have no employer relationship to fall back on. As such, FIC provides a needed service to middle class working New Yorkers that cannot be easily replicated. The bill would allow members of FIC to continue to receive their existing benefits for one year after implementation of the ACA reforms, as originally contemplated by the Legislature.

Legislative history

New bill.

Fiscal implications

None.

Effective date

Immediately and shall expire and be deemed repealed on December 31, 2014.