Relates to the definition of small group for the purposes of health insurance policies and contracts; repealer

Section 2 amends insurance law section 3231(a)(3) to return the definition of "small group" to 1-50 employees or members of such group.

Section 3 amends insurance law section 3231(h)(I) to harmonize the provisions of such subsection with the definition of "small group."

Section 4 amends insurance law section 4317(a)(1) to return the definition of "small group" to 1-50 employees or members of such group.

Section 5 amends insurance law section 4317(e)(1) to harmonize the provisions of such subsection with the definition of "small group."

Section 6 amends insurance law section 3231(g)(1) to harmonize the provisions of such subsection with the definition of "small group."

Section 7 amends insurance law section 4317(d)(1) to harmonize the provisions of such subsection with the definition of "small group."

Section 8 repeals section 7 of chapter 12 of the laws of 2016.

Section 9 is the effective date.

Justification

The historic size of the small group market has been employers with 50 or fewer employees. State regulators, in every state, either via law or administrative rule had established this small group size at 1-50 for their local insurance market.

The federal ACA, amongst other things, changed the definition of "small employer" from 1-50 employees to 1-100 employees, as of January I, 2016. As part of the passage of the State Fiscal Year (SFY) 2013-14 New York State Budget (C.56, L. 2013), the State amended the definition of "small group" in the NY insurance law to 1-100 employees or members, to conform with the federal ACA definition, effective January 1, 2016.

This expansion of the definition of "small group" to 1-100 employees or members of such group, has had the unintended consequence of increasing the costs of health insurance coverage for groups of 51-100, by virtue of raising premium rates or subscriber costs together with higher deductibles and co-pays, coupled with fewer available policy choices from insurance carriers or health plans, and narrower healthcare provider panels, both in and out of network. The small group definitional expansion has also caused certain midsized, self-insured groups in the 51-100 range, to lose their stop loss insurance or catastrophic coverage, since this coverage cannot be legally sold into the NY small group market.

Trade organizations, business groups and market participants nationwide supported changes to the ACA that repealed this requirement. The bipartisan PACE Act was intended to enact market reforms to revise the ACA definition of small employer back to 1-50, to mitigate such market disruptions in the several states. The PACE Act passed Congress unanimously and was signed by President Obama in the fall of 2015. Since that time, nearly every state has adjusted either by legislation, regulation or administrative order their small group size to remain at 50 or below. Four states have not; California, Colorado, New York and Vermont.

This bill would obviate the foregoing problems and market disruptions simply by conforming the definition of "small group" in the NY insurance law with the federal definition of "small employer" under the PACE Act, back to 1-50 employees or members. This action is necessary to preserve a robust health insurance marketplace, inside and outside the New York State of Health (NYSOH) Insurance Marketplace Exchange, for all midsized employer and union groups, together with municipal, school and library consortiums.

Legislative history

New bill.

Fiscal implications

None to the State. Substantial health plan cost savings are expected to be realized by municipalities, school districts and library consortiums.

Effective date

Immediately, provided however that the amendments to paragraph 1 of subsection (g) and paragraph I of subsection(h) of section 3231, and paragraph 1 of subsection (d) and paragraph 1 of subsection (e) of section 4317 of the insurance law made by sections 6, 3, 7, and 5 of this act respectively shall not affect the expiration and reversion of such paragraphs and shall expire and be deemed repealed therewith.