What's happening
This bill changes the required notice period for discontinuing a class of health insurance contracts from five months to ninety days.
Why it matters
Shortening the notice period from five months to ninety days could allow health insurers to react more quickly to changing market conditions or regulatory requirements, potentially improving business flexibility.
Consumers and group policyholders may have less time to prepare for a discontinuation of their health insurance coverage, which could impact their ability to find and secure alternative coverage.
The amendment maintains protections by requiring insurers to act uniformly without regard to health status and to offer other available coverage options, helping to prevent discriminatory practices during contract discontinuations.
The superintendent retains authority to approve alternative arrangements under certain conditions, which could provide additional pathways for coverage continuity in the event of a class discontinuance.
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Shorten Insurance Notice Period
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Signed chap.317
- Delivered to governor
- Returned to senate
- Passed assembly
- Ordered to third reading rules cal.405
- Substituted for A7737
- Referred to insurance
- Delivered to assembly
- Passed senateVote 62–1
- Advanced to third reading
- 2nd report cal.
- 1st report cal.1081
Show 1 earlier action
- Referred to insurance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Shorten Insurance Notice Period
Assembly Floor Calendar · Sponsor Kevin Cahill
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5723
2017-2018 Regular Sessions
IN SENATE
April 26, 2017
Introduced by Sen. SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law, in relation to conforming changes to discontinuance notices
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Item (i) of subparagraph (C) of paragraph 2 of subsection (c) of section 4304 of the insurance law, as amended by chapter 388 of the laws of 2014, is amended to read as follows:
(i) Discontinuance of a class of contract upon not less than [five months'] ninety days' prior written notice. In exercising the option to discontinue coverage pursuant to this item, the corporation must act uniformly without regard to any health status-related factor of enrolled individuals or individuals who may become eligible for such coverage and must offer to subscribers or group remitting agents, as may be appropriate, the option to purchase all other individual health insurance coverage currently being offered by the corporation to applicants in that market. Provided, however, the superintendent may, after giving due consideration to the public interest, approve a request made by a corporation for the corporation to satisfy the requirements of this item through the offering of contracts at each level of coverage as defined in section 1302(d) of the affordable care act, 42 U.S.C. § 18022(d) that contains the benefits described in paragraph one of subsection (b) of section four thousand three hundred twenty-eight of this chapter by another corporation, insurer or health maintenance organization within the corporation's same holding company system, as defined in article fifteen of this chapter.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11235-01-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the insurance law, in relation to conforming changes to discontinuance notices
Purpose
To make discontinuance notices consistent across not-for-profit, HMO, group and commercial plans
Summary of provisions
Section 1 of the bill reduces the time period not-for-profit and health maintenance organizations of a notice of the discontinuance of an insurance product from 5 months to 90 days.
Section 2 of the bill provides an effective date.
Justification
Currently, not-for-profit (NFP) health plans and health maintenance organizations (HMOs) are required to give members notice of the discontinuance of an Individual insurance product 5 months prior to termination of coverage, whereas both commercial Individual coverage and group coverage are required to give members a discontinuance notice 90 days prior to termination. This disparity in requirements reflects an arcane and unintended anomaly in the law which creates difficulties in plan administration and provides no tangible benefit to consumers.
Specifically, the 5 month notice requirement would require, for January 1 renewals notice of policy discontinuance to be mailed prior to August 1st of the preceding year. Providing notice this far in advance of renewal is prior to both the finalization of rates approved by the Department of Financial Services ("DFS"), prior to the final approval of policy forms and prior to the decision by plans to participate on the Exchange. Thus, the current process not only forces plans to make decisions on discontinuing policies prematurely (prior to rates being finalized), and perhaps unnecessarily alarming consumers, but the additional time is meaningless to consumers because other product options in the market are not available and the corresponding premium is for those alternative products has not yet been finalized.
In addition to being administratively burdensome, requiring notices 5 month in advance causes unnecessary alarm for consumers. Consumers may believe that a product is being discontinued when plans have merely preserved their right to discontinue a product after consideration of the adequacy of the promulgated rate. Subsequently, based on the adequacy of the rate, the plan may determine not to discontinue to product. Limiting the notice to 90 days, consistent with all other polices, both eliminates the unnecessary anxiety that the 5 month notice bears, but also provides a more meaningful opportunity for consumers to select an alternative product, in the event the plan does in fact discontinue the product.
This bill proposes to create a consistent standard across all health plans, which will result in administrative efficiencies and clear communication of intentions to members.
Legislative history
New bill.
Fiscal implications
None.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.