What's happening
This bill requires insurers and health maintenance organizations to notify individuals at least 30 days before group health insurance is terminated.
Why it matters
Improves Transparency and Individual Protection. By requiring insurers, group contract holders, and health maintenance organizations to collect and update residential addresses and individually notify each insured person or member before coverage is terminated, the bill helps ensure that individuals are not caught off guard by a sudden loss of health insurance.
Clarifies Rights After Termination. The law mandates that notifications include a complete statement of the insured’s rights regarding coverage for medical events both before and after termination, as well as any other rights under the policy or law. This could help people make informed decisions about seeking care or finding new coverage.
Standardizes Notification Exceptions. The bill provides clear exceptions where notice is not required, such as when comparable coverage is arranged or when the policyholder (like an employer) already provides adequate notice. This aims to prevent duplicate notices but ensures someone is always responsible for informing affected individuals.
Shifts Some Administrative Costs. Policyholders (often employers) may be required to reimburse insurers or health maintenance organizations for the costs of mailing these notices if requested, which could impact how businesses handle group health policy administration.
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Advance Notice for Insurance Termination
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to insurance
- 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.
Advance Notice for Insurance Loss
In Assembly Committee · Insurance · Sponsor David Weprin
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3764
2019-2020 Regular Sessions
IN SENATE
February 13, 2019
Introduced by Sen. PARKER -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to amend the insurance law and the public health law, in relation to notification of termination of group health insurance
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subsection (a) of section 3221 of the insurance law is amended by adding a new paragraph 17 to read as follows:
(17) (A) That the insurer shall require the policyholder to provide it with the names and residential addresses of all individuals who because of their employee or membership status are certificate holders under such policy, and to update such information at least annually; and in the event the insurer terminates such policy, shall give each certificate holder at least thirty days prior written notice of termination of coverage, by mailing such notice to the last provided residential address for such certificate holder; provided, however, that such notice shall not be required where the policyholder has: (1) provided such certificate holder at least thirty days prior written notice of the termination of coverage, by mailing such notice to the certificate holder's last known residential address, or, if the certificate holder is represented by a labor organization, provided the representative of such labor organization with such written notice, or (2) has contracted with another insurer to provide similar coverage for the same certificate holders, and has provided certificate holders with the name of the substituted insurer. No termination of a group policy or contract of health, or accident and health insurance shall become effective until thirty days after the mailing of such notice of termination contract, if required.
(B) The insurer shall include with such notice a complete statement of the rights of the certificate holder under the termination of the policy as to coverage for illness, accident and treatment occurring prior to
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD07404-01-9
S. 3764 2
and subsequent to the termination date, and such other rights of certificate holders as may exist under the contract or policy or pursuant to paragraph one of subsection (e) of this section.
(C) Upon written request, the holder of the policy being terminated shall reimburse the insurer for all reasonable and necessary costs associated with providing such notice to certificate holders.
§ 2. Section 4305 of the insurance law is amended by adding a new subsection (n) to read as follows:
(n) (1) A group contract issued pursuant to this section shall contain a provision that the insurer shall require the group contract holder to provide it with the names and residential addresses of all individuals who because of their employee or membership status are certificate holders under such policy, and to update such information at least annually; and in the event the insurer terminates such policy, shall give each certificate holder at least thirty days prior written notice of termination of coverage, by mailing such notice to the last provided residential address for such certificate holder; provided, however, that such notice shall not be required where the group policyholder has: (A) provided such certificate holders at least thirty days prior written notice of the termination of coverage, by mailing such notice to such certificate holder's last known residential address, or, if such certificate holder is represented by a labor organization, provided the representative of such labor organization with such written notice, or (B) has contracted with another insurer to provide similar coverage for the same certificate holders, and has provided such certificate holders with the name of the substituted insurer. No termination of a group policy or contract of health, or accident and health insurance shall become effective until thirty days after the mailing of such notice of termination contract, if required.
(2) The insurer shall include with such notice a complete statement of the rights of the certificate holder under the termination of the policy as to coverage for illness, accident and treatment occurring prior to and subsequent to the termination date, and such other rights of certificate holders as may exist under the contract or policy or pursuant to paragraph one of subsection (d) of this section.
(3) Upon written request, the holder of the group policy being terminated shall reimburse the insurer for all reasonable and necessary costs associated with providing such notice to certificate holders.
§ 3. The public health law is amended by adding a new section 4407-a to read as follows:
§ 4407-a. Group contracts; notification of cancellation requirements. 1. A health maintenance organization shall require a policyholder to provide it with the names and residential addresses of all individuals who because of their employee or membership status are members in such health maintenance organization, and to update such information at least annually; and in the event the health maintenance organization terminates such policy, shall give each such member at least thirty days prior written notice of termination of coverage, by mailing such notice to the last provided residential address for such member; provided, however, that such notice shall not be required where the policyholder has: (a) provided such member at least thirty days prior written notice of the termination of coverage, by mailing such notice to such member's last known residential address, or, if the member is represented by a labor organization, provided the representative of such labor organization with such written notice, or (b) has contracted with another health maintenance organization or insurer to provide similar coverage for the
S. 3764 3
same members, and has provided members with the name of the substituted health maintenance organization or insurer. No termination of a group policy or contract of health, or accident and health insurance shall become effective until thirty days after the mailing of such notice of termination contract, if required.
2. The health maintenance organization shall include with such notice a complete statement of the rights of the member under the termination of the policy as to coverage for illness, accident and treatment occurring prior to and subsequent to the termination date, and such other rights of members as may exist under the contract or policy or pursuant to this article and article forty-three of the insurance law.
3. Upon written request, the holder of the policy being terminated shall reimburse the health maintenance organization for all reasonable and necessary costs associated with providing such notice to members.
§ 4. This act shall take effect on the ninetieth day after it shall have become a law.
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 and the public health law, in relation to notification of termination of group health insurance
Purpose
This bill seeks to protect employees and others covered under group health insurance policies or plans against lapses in their insurance coverage, by requiring timely notice if their coverage is being termi- nated.
Summary of provisions
This bill adds new Insurance Law § 3221(a) (17), Insurance Law § 4305, and Public Health Law § 4407-a, to require an insurance company, whether for profit or non-profit, or health maintenance organization, at the policyholder's expense, to notify those who are insured or covered ("certificate holders" or "members") under a policy of group health insurance or plan when such policy or plan is being terminated. The bill requires policyholders to provide their insurance companies or health maintenance organizations with the names and addresses of each enrollee annually. The insurer or health maintenance organization need not provide notice of the pending termination of coverage if the policyhold- er has provided such notice to the insured or covered person or obtained replacement coverage. The bill also provides that the termination of insurance cannot take effect until 30 days after the notice is sent.
Read the full memo (1,110 words)
This bill would take effect on the 90th day following enactment.
Existing law
Insurance Law SS 3221 and 4305 currently provide a right to convert to an individual policy of health and accident insurance without producing evidence of insurability and without a gap in coverage, to persons who lose their coverage under a group health insurance policy. Labor Law 5195 and 217 require employers to notify each certificate holder (i.e. insured employee) of termination of the policy.
Justification
The loss of health insurance coverage can have a devastating impact on insureds and their families. Individuals who lose such coverage are forced to decide between delaying necessary medical care and thereby potentially jeopardizing their health, or spending their savings or incurring substantial debt to cover expensive medical treatments. There is particular hardship when individuals believe that they have health coverage through a group health insurance policy or health maintenance organization, only to learn too late that the payment of premiums has stopped and the coverage has consequently been terminated.
The New York State Legislature addressed this problem in 1987 when it amended Insurance Law § 3221 to extend the right to convert to an indi- vidual health and accident insurance policy to situations where coverage is lost because the policyholder (e.g., the employer or a professional association) failed to pay premiums or took some other action resulting in the termination of the group policy. In addition, insurance Law 4305 provides a similar right to convert where coverage provided by a nonpro- fit insurance company is terminated for any reason whatsoever. To facil- itate the exercise of this right, Insurance Law § 4235 and regulations (11 NYCRR 55.2) require the insurance carrier or health maintenance organization to provide notice of termination to the policyholder, and Labor Law §§ 195 and 217 require employers to notify each certificate holder or member (i.e. insured or covered employees).
Unfortunately, these statutes and regulations do not provide sufficient protections. In particular, the requirement that employers notify each certificate holder under Labor Law § 217 may be preempted by the Employ- ee Retirement Income Security Act of 1974 (ERISA) SEE HOWARD V. GLEASON CORPORATION, 901 F.2d 1154 (2nd Cir. 1990). In addition, there have been many instances in which defaulting employers do not notify their employ- ees of impending insurance or plan termination as a result of the employer's failure to make health insurance premium payments or failure to remit to the insurance company or health maintenance organization premiums that have been deducted from employees' wages. When insured or covered employees in such cases do not have timely knowledge of the termination of their group coverage, they may fail to exercise their right to convert to an individual policy, which may be exercised only up to 45 days from termination.
This problem is compounded by the insurance industry practice of "carry- ing" employers and other policyholders who are experiencing temporary difficulties, for varying periods, depending upon the carrier's assess- ment of their basic soundness. Although this practice salvages some policies from immediate cancellation, since eventual cancellations for non-payment are' retroactive to the last period of payment, claims filed during the "grace" period are not honored. Moreover, by the time the insured discovers the cancellation, the privilege to convert may have lapsed. By this time the policy holder may no longer be functioning or solvent, and the individual formerly insured is left unprotected, possi- bly with unreimbursed medical bills and nowhere to look for recourse.
This bill addresses this problem by requiring insurance companies and health maintenance organizations to notify insured or covered employees at the policyholder's expense, when coverage is being canceled. The insurer or health maintenance organization will not be required to provide notice if the policyholder has already advised those insured or covered of the termination, or, if the insured or covered person is represented by a labor organization, has provided the representative of such labor organization with such notice, or has notified the insured or covered person that a replacement insurance company will be providing similar coverage. In addition, the bill provides that the termination of insurance or coverage cannot take effect until 30 days after the notice is sent.
The Legislature has recognized the vital importance of continued health insurance coverage and has already declared that the public interest requires notification to employees of any termination of their group health insurance or coverage so that alternate coverage can be secured.
However, as experience has demonstrated, defaulting employers suffering serious financial reverses or other adverse circumstances may fail, or choose not to do so. Moreover, it is appropriate to mandate that notice be provided to all of those insured or covered under all group policies or plans. This bill will provide an alternative method for workers to learn about the pending termination of their insurance coverage or plan, and will help to ensure that no one covered under group insurance poli- cies or group plans loses coverage without notice and an opportunity to timely exercise their conversion privilege.
Legislative history
2017-18: 52270 Referred to Insurance
2015-16:S.1932/A.2649-Referred to Insurance
2013-14:S.2695/A.640-Referred to Insurance
2011-12:S.1167/A.2006-Referred to Insurance
2009-10:S.8197/A.6647A-Referred to Rules/Referred to Insurance
2008-09:A.7780-Passed Assembly
2006-07:S.6017/A.7780-Died in Senate/Passed Assembly
2004-05:S.5044/A.8516-Died in Senate/Passed/Passed Assembly
2003-04:S.5044/A.8517-Died in Senate/Passed Assembly
Similar legislation was introduced in 2001-2002, as S.5170/A.8577.
Fiscal implications
There are no fiscal implications.
Effective date
This bill takes effect on ninetieth day following the date on which it becomes law.
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