S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  2197

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            January 15, 2009
                               ___________

Introduced  by  M. of A. MORELLE, SCHIMMINGER, CYMBROWITZ, PERRY, CANES-
  TRARI, KOON, WEPRIN, ORTIZ, BRADLEY, HIKIND -- Multi-Sponsored  by  --
  M.  of A. BENJAMIN, BOYLAND, COLTON, DESTITO, LATIMER, LUPARDO, MAGEE,
  ROBINSON, TOWNS, WRIGHT -- read once and referred to the Committee  on
  Insurance

AN ACT to amend the insurance law, in relation to establishment of free-
  dom  health  insurance  plans;  to  amend  the tax law, in relation to
  providing a tax credit for the purchase of certain  health  insurance;
  and  to amend the public health law, in relation to the health mainte-
  nance organization direct pay market program

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Subsection  (l)  of section 3216 of the insurance law, as
added by chapter 504 of the laws of 1995, is amended to read as follows:
  (l) On and after January  first,  nineteen  hundred  ninety-seven,  no
insurer  shall  offer  major  medical, comprehensive or other comparable
individual contracts, other than for purposes of conversion, unless  the
benefits  of  such contracts, including deductibles and coinsurance, are
identical to the out-of-plan benefits  of  the  contracts  described  in
section  four  thousand  three  hundred twenty-two of this chapter. Such
contracts must include a prescription drug benefit  complying  with  the
requirements  of that section. THE REQUIREMENTS OF THIS SUBSECTION SHALL
NOT APPLY TO A POLICY INTENDED TO QUALIFY FOR USE IN  A  HEALTH  SAVINGS
ACCOUNT  PURSUANT  TO  SECTION 1201 OF THE FEDERAL MEDICARE PRESCRIPTION
DRUG, IMPROVEMENT AND MODERNIZATION ACT OF 2003. SUCH POLICIES SHALL  BE
KNOWN AS "FREEDOM POLICIES".
  S  2.  Section  3221  of  the insurance law is amended by adding a new
subsection (r) to read as follows:
  (R) NO GROUP OR BLANKET ACCIDENT AND HEALTH INSURANCE POLICY ISSUED OR
ISSUED FOR DELIVERY IN THIS STATE FOR USE IN A  HEALTH  SAVINGS  ACCOUNT
PURSUANT  TO  SECTION  1201  OF  THE FEDERAL MEDICARE PRESCRIPTION DRUG,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD04920-01-9
              

A. 2197                             2

IMPROVEMENT, AND MODERNIZATION ACT OF 2003 SHALL BE REQUIRED TO MEET THE
REQUIREMENTS OF THIS SECTION, OR REGULATIONS ISSUED BY  THE  SUPERINTEN-
DENT, WITH REGARD TO COVERED HEALTH CARE SERVICES WHICH MUST BE INCLUDED
IN THE POLICY. SUCH POLICIES SHALL BE KNOWN AS "FREEDOM POLICIES".
  S  3. Subsection (l) of section 4304 of the insurance law, as added by
chapter 504 of the laws of 1995, is amended to read as follows:
  (l) On and after January  first,  nineteen  hundred  ninety-seven,  no
insurer  shall  offer  major  medical, comprehensive or other comparable
individual contracts on a direct payment basis, other than for  purposes
of  conversion, unless the benefits of such contracts, including deduct-
ibles and coinsurance, are identical to the out-of-plan benefits of  the
contracts described in section four thousand three hundred twenty-two of
this  article.  Such  contracts must include a prescription drug benefit
complying with the requirements of such  section.  THE  REQUIREMENTS  OF
THIS  SUBSECTION SHALL NOT APPLY TO A POLICY INTENDED TO QUALIFY FOR USE
IN A HEALTH SAVINGS ACCOUNT PURSUANT TO  SECTION  1201  OF  THE  FEDERAL
MEDICARE  PRESCRIPTION  DRUG, IMPROVEMENT AND MODERNIZATION ACT OF 2003.
SUCH POLICIES SHALL BE KNOWN AS "FREEDOM POLICIES".
  S 4. Section 4304 of the insurance law is  amended  by  adding  a  new
subsection (m) to read as follows:
  (M)  NO POLICY ISSUED TO A REMITTING AGENT ON BEHALF OF A GROUP PURSU-
ANT TO SUBSECTION (A) OF THIS SECTION, AND NO POLICY ISSUED TO  A  GROUP
PURSUANT  TO  SECTION  FOUR THOUSAND THREE HUNDRED FIVE OF THIS ARTICLE,
FOR USE IN A HEALTH SAVINGS ACCOUNT PURSUANT  TO  SECTION  1201  OF  THE
FEDERAL  MEDICARE  PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT
OF 2003 SHALL BE REQUIRED TO MEET THE REQUIREMENTS OF  THIS  SECTION  OR
SECTION FOUR THOUSAND THREE HUNDRED FIVE OF THIS ARTICLE, OR REGULATIONS
ISSUED  BY  THE  SUPERINTENDENT,  WITH  REGARD  TO  COVERED  HEALTH CARE
SERVICES WHICH MUST BE INCLUDED IN THE POLICY. SUCH  POLICIES  SHALL  BE
KNOWN AS "FREEDOM POLICIES".
  S  5.  Subsection (a) of section 4322 of the insurance law, as amended
by chapter 342 of the laws of 2004, is amended to read as follows:
  (a) On and after  January  first,  nineteen  hundred  ninety-six,  all
health maintenance organizations issued a certificate of authority under
article forty-four of the public health law or licensed under this arti-
cle shall offer to individuals, in addition to the standardized contract
required by section four thousand three hundred twenty-one of this arti-
cle,  a  standardized  individual enrollee direct payment contract on an
open enrollment basis as  prescribed  by  section  four  thousand  three
hundred seventeen of this article and section four thousand four hundred
six  of  the  public health law, and regulations promulgated thereunder,
with  an  out-of-plan  benefit  system,  provided,  however,  that  such
requirements shall not apply to a health maintenance organization exclu-
sively  serving individuals enrolled pursuant to title eleven of article
five of the social services law, title eleven-D of article five  of  the
social  services  law,  title one-A of article twenty-five of the public
health law or title eighteen of the federal Social  Security  Act,  and,
further  provided,  that  such health maintenance organization shall not
discontinue a contract for an  individual  receiving  comprehensive-type
coverage  in  effect  prior  to  January first, two thousand four who is
ineligible to purchase policies offered after such date pursuant to this
section or section four thousand three hundred  [twenty-two]  TWENTY-ONE
of this article due to the provision of 42 U.S.C. 1395ss in effect prior
to  January  first,  two  thousand  four. The out-of-plan benefit system
shall either be provided by the health maintenance organization pursuant
to subdivision two of section four thousand  four  hundred  six  of  the

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public  health law or through an accompanying insurance contract provid-
ing out-of-plan benefits offered by  a  company  appropriately  licensed
pursuant  to  this chapter. On and after January first, nineteen hundred
ninety-six,  the  contracts  issued pursuant to this section and section
four thousand three hundred twenty-one of this article shall be the only
contracts offered by health maintenance  organizations  to  individuals;
PROVIDED,  HOWEVER, THIS LIMITATION SHALL NOT APPLY TO ONE OR MORE POLI-
CIES INTENDED TO QUALIFY FOR USE IN A HEALTH SAVINGS ACCOUNT PURSUANT TO
SECTION 1201 OF THE FEDERAL MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND
MODERNIZATION ACT OF 2003. SUCH POLICIES  SHALL  BE  KNOWN  AS  "FREEDOM
POLICIES".  The enrollee contracts issued by a health maintenance organ-
ization under this section and section four thousand three hundred twen-
ty-one  of  this  article shall also be the only contracts issued by the
health maintenance organization for purposes of conversion  pursuant  to
sections  four  thousand  three  hundred  four  and  four thousand three
hundred five of this article. However, nothing in this section shall  be
deemed to require health maintenance organizations to terminate individ-
ual  direct  payment  contracts  issued prior to January first, nineteen
hundred ninety-six or prohibit  health  maintenance  organizations  from
terminating  individual direct payment contracts issued prior to January
first, nineteen hundred ninety-six.
  S 6. Section 210 of the tax law is amended by adding a new subdivision
41 to read as follows:
  41. (A) A TAXPAYER WHO IS A QUALIFIED SMALL EMPLOYER SHALL BE  ALLOWED
A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE EQUAL TO THE APPLICABLE
PERCENTAGE OF PREMIUMS PAID DURING THE TAXABLE YEAR FOR HEALTH INSURANCE
BY  SUCH  EMPLOYER.  THE APPLICABLE PERCENTAGE SHALL BE (I) FIVE PERCENT
FOR TAXABLE YEARS BEGINNING ON OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND
NINE,  (II)  TEN PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY
FIRST, TWO THOUSAND TEN, (III) FIFTEEN PERCENT FOR TAXABLE YEARS  BEGIN-
NING ON OR AFTER JANUARY FIRST, TWO THOUSAND ELEVEN, (IV) TWENTY PERCENT
FOR  TAXABLE  YEARS  BEGINNING  ON  OR AFTER JANUARY FIRST, TWO THOUSAND
TWELVE, (V) TWENTY-FIVE PERCENT FOR TAXABLE YEARS BEGINNING ON OR  AFTER
JANUARY  FIRST,  TWO  THOUSAND THIRTEEN, (VI) THIRTY PERCENT FOR TAXABLE
YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND FOURTEEN,  (VII)
THIRTY-FIVE  PERCENT  FOR  TAXABLE  YEARS  BEGINNING ON OR AFTER JANUARY
FIRST, TWO THOUSAND FIFTEEN, (VIII)  FORTY  PERCENT  FOR  TAXABLE  YEARS
BEGINNING  ON  OR  AFTER  JANUARY  FIRST, TWO THOUSAND SIXTEEN, AND (IX)
FORTY-THREE PERCENT FOR TAXABLE YEARS  BEGINNING  ON  OR  AFTER  JANUARY
FIRST, TWO THOUSAND SEVENTEEN.
  (B)  THE  CREDIT ALLOWED UNDER THIS SUBDIVISION FOR ANY YEAR SHALL NOT
REDUCE THE TAX DUE FOR SUCH YEAR TO LESS THAN THE HIGHER OF THE  AMOUNTS
PRESCRIBED IN PARAGRAPHS (C) AND (D) OF SUBDIVISION ONE OF THIS SECTION.
IF,  HOWEVER,  THE AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR
ANY TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY  AMOUNT  OF  CREDIT
NOT DEDUCTIBLE IN SUCH TAXABLE YEAR MAY BE CARRIED OVER TO THE FOLLOWING
YEAR  OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH YEAR
OR YEARS.
  (C) FOR THE PURPOSES OF THIS SUBDIVISION  "QUALIFIED  SMALL  EMPLOYER"
SHALL  MEAN  AN  INDIVIDUAL  PROPRIETOR  WHO IS THE SOLE EMPLOYEE OF THE
BUSINESS OR AN EMPLOYER WITH NOT MORE THAN  FIFTY  EMPLOYEES  WHO  IS  A
"SMALL BUSINESS TAXPAYER" AS DEFINED IN PARAGRAPH (F) OF SUBDIVISION ONE
OF THIS SECTION.
  (D)  FOR THE PURPOSES OF THIS SUBDIVISION, THE TERM "HEALTH INSURANCE"
MEANS AN ACCIDENT AND HEALTH INSURANCE POLICY SUBJECT TO THE  PROVISIONS
OF  SECTION  THREE  THOUSAND  TWO  HUNDRED  SIXTEEN,  THREE THOUSAND TWO

A. 2197                             4

HUNDRED TWENTY-ONE, FOUR THOUSAND THREE HUNDRED THREE OR  FOUR  THOUSAND
EIGHT  HUNDRED  ONE  OF THE INSURANCE LAW, AND ARTICLE FORTY-FOUR OF THE
PUBLIC HEALTH LAW AND SHALL INCLUDE "FREEDOM POLICIES" WHICH QUALIFY FOR
USE  IN A HEALTH SAVINGS ACCOUNT PURSUANT TO SECTION 1201 OF THE FEDERAL
MEDICARE PRESCRIPTION DRUG, IMPROVEMENT AND MODERNIZATION ACT OF 2003.
  S 7. Subparagraph (B) of paragraph 1 of subsection (i) of section  606
of the tax law, as amended by section 2 of part ZZ1 of chapter 57 of the
laws of 2008, is amended to read as follows:
  (B)  shall  be  treated as the owner of a new business with respect to
such share if the corporation qualifies as a new  business  pursuant  to
paragraph  (j)  of subdivision twelve of section two hundred ten of this
chapter.

                                     The corporation's credit base under
                                     section two hundred ten or section
With respect to the following        fourteen hundred fifty-six of this
credit under this section:           chapter is:

(I) Investment tax credit            Investment credit base
under subsection (a)                 or qualified
                                     rehabilitation
                                     expenditures under
                                     subdivision twelve of
                                     section two hundred ten

(II) Empire zone                     Cost or other basis
investment tax credit                under subdivision
under subsection (j)                 twelve-B
                                     of section two hundred
                                     ten

(III) Empire zone                    Eligible wages under
wage tax credit                      subdivision nineteen of
under subsection (k)                 section two hundred ten
                                     or subsection (e) of
                                     section fourteen hundred
                                     fifty-six

(IV) Empire zone                     Qualified investments
capital tax credit                   and contributions under
under subsection (l)                 subdivision twenty of
                                     section two hundred ten
                                     or subsection (d) of
                                     section fourteen hundred
                                     fifty-six

(V) Agricultural property tax        Allowable school
credit under subsection (n)          district property taxes under
                                     subdivision twenty-two of
                                     section two hundred ten

(VI) Credit for employment           Qualified first-year wages or
of persons with dis-                 qualified second-year wages
abilities under                      under subdivision
subsection (o)                       twenty-three of section
                                     two hundred ten

A. 2197                             5

                                     or subsection (f)
                                     of section fourteen
                                     hundred fifty-six

(VII) Employment incentive           Applicable investment credit
credit under subsec-                 base under subdivision
tion (a-1)                           twelve-D of section two
                                     hundred ten

(VIII) Empire zone                   Applicable investment
employment                           credit under sub-
incentive credit under               division twelve-C
subsection (j-1)                     of section two hundred ten

(IX) Alternative fuels credit        Cost under subdivision
under subsection (p)                 twenty-four of section two
                                     hundred ten

(X) Qualified emerging               Applicable credit base
technology company                   under subdivision twelve-E
employment credit                    of section two hundred ten
under subsection (q)

(XI) Qualified emerging              Qualified investments under
technology company                   subdivision twelve-F of
capital tax credit                   section two hundred ten
under subsection (r)

(XII) Credit for purchase of an      Cost of an automated
automated external defibrillator     external defibrillator under
under subsection (s)                 subdivision twenty-five of
                                     section two hundred ten
                                     or subsection (j) of section
                                     fourteen hundred fifty-six

(XIII) Low-income housing            Credit amount under
credit under subsection (x)          subdivision thirty
                                     of section two hundred ten or
                                     subsection (l) of section
                                     fourteen hundred fifty-six

(XIV) Credit for transportation      Amount of credit under sub-
improvement contributions            division thirty-two of section
under subsection (z)                 two hundred ten or subsection
                                     (n) of section fourteen
                                     hundred fifty-six

(XV) QEZE credit for real property   Amount of credit under
taxes under subsection (bb)          subdivision twenty-seven of
                                     section two hundred ten or
                                     subsection (o) of section
                                     fourteen hundred fifty-six

(XVI) QEZE tax reduction credit      Amount of benefit period
under subsection (cc)                factor, employment increase factor
                                     and zone allocation

A. 2197                             6

                                     factor (without regard
                                     to pro ration) under
                                     subdivision twenty-eight of
                                     section two hundred ten or
                                     subsection (p) of section
                                     fourteen hundred fifty-six
                                     and amount of tax factor
                                     as determined under
                                     subdivision (f) of section sixteen

(XVII) Green building credit         Amount of green building credit
under subsection (y)                 under subdivision thirty-one
                                     of section two hundred ten
                                     or subsection (m) of section
                                     fourteen hundred fifty-six

(XVIII) Credit for long-term         Qualified costs under
care insurance premiums              subdivision twenty-five-a of
under subsection (aa)                section two hundred ten
                                     or subsection (k) of section
                                     fourteen hundred fifty-six

(XIX) Brownfield redevelopment       Amount of credit
credit under subsection              under subdivision
(dd)                                 thirty-three of section
                                     two hundred ten
                                     or subsection (q) of
                                     section fourteen hundred
                                     fifty-six

(XX) Remediated brownfield           Amount of credit under
credit for real property             subdivision thirty-four
taxes for qualified                  of section two hundred
sites under subsection               ten or subsection (r) of
(ee)                                 section fourteen hundred
                                     fifty-six

(XXI) Environmental                  Amount of credit under
remediation                          subdivision thirty-five of
insurance credit under               section two hundred
subsection (ff)                      ten or subsection
                                     (s) of section
                                     fourteen hundred
                                     fifty-six

(XXII) Empire state film production  Amount of credit for
                                     qualified
credit under subsection (gg)         production costs in production
                                     of a qualified film under
                                     subdivision thirty-six of
                                     section two hundred ten

(XXIII) Qualified emerging           Qualifying expenditures and
technology company facilities,       development activities under
operations and training credit       subdivision twelve-G of section
under subsection (nn)                two hundred ten

A. 2197                             7

(XXIV) Security training tax         Amount of credit
credit under                         under subdivision thirty-seven
subsection (ii)                      of section two hundred ten or
                                     under subsection (t) of
                                     section fourteen hundred fifty-six

(XXV) Credit for qualified fuel      Amount of credit under
cell electric generating equipment   subdivision thirty-seven
expenditures under subsection (g-2)  of section two hundred ten
                                     or subsection (t) of
                                     section fourteen hundred
                                     fifty-six

(XXVI) Empire state commercial       Amount of credit for
production credit                    qualified production costs in
under subsection (jj)                production of a qualified commercial
                                     under subdivision thirty-eight
                                     of section two hundred ten

(XXVII) Biofuel production           Amount of credit
tax credit under                     under subdivision
subsection (jj)                      thirty-eight of
                                     section two hundred ten

(XXVIII) Clean heating fuel          Amount of credit under
credit under subsection (mm)         subdivision thirty-nine of
                                     section two hundred ten

(XXIX) Credit for rehabilitation     Amount of credit under
of historic properties               subdivision forty of
under subsection (oo)                [subsection] SECTION two hundred ten

(XXX) Credit for companies who       Amount of credit under
provide transportation               subdivision forty of
to individuals                       section two hundred ten
with disabilities
under subsection (oo)

(XXXI) SMALL EMPLOYER HEALTH         CREDIT UNDER SUBDIVISION
CARE INSURANCE CREDIT                FORTY-ONE OF SECTION TWO
UNDER SUBSECTION (QQ)                HUNDRED TEN
  S  8. Section 606 of the tax law is amended by adding a new subsection
(qq) to read as follows:
  (QQ) SMALL EMPLOYER HEALTH CARE INSURANCE CREDIT. (1) A  TAXPAYER  WHO
IS  A QUALIFIED SMALL EMPLOYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX
IMPOSED BY THIS ARTICLE EQUAL TO THE APPLICABLE PERCENTAGE OF THE PREMI-
UMS PAID DURING THE TAXABLE YEAR FOR HEALTH INSURANCE BY SUCH  EMPLOYER.
THE  APPLICABLE  PERCENTAGE  SHALL BE (A) FIVE PERCENT FOR TAXABLE YEARS
BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND NINE, (B) TEN  PERCENT
FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND TEN,
(C)  FIFTEEN  PERCENT  FOR  TAXABLE  YEARS BEGINNING ON OR AFTER JANUARY
FIRST, TWO THOUSAND ELEVEN, (D) TWENTY PERCENT FOR TAXABLE YEARS  BEGIN-
NING  ON  OR  AFTER  JANUARY FIRST, TWO THOUSAND TWELVE, (E) TWENTY-FIVE
PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
SAND THIRTEEN, (F) THIRTY PERCENT FOR  TAXABLE  YEARS  BEGINNING  ON  OR
AFTER  JANUARY FIRST, TWO THOUSAND FOURTEEN, (G) THIRTY-FIVE PERCENT FOR

A. 2197                             8

TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOUSAND FIFTEEN,
(H) FORTY PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST,
TWO THOUSAND SIXTEEN, AND (I)  FORTY-THREE  PERCENT  FOR  TAXABLE  YEARS
BEGINNING  ON  OR  AFTER  JANUARY  FIRST, TWO THOUSAND SEVENTEEN. IF THE
AMOUNT OF THE CREDIT ALLOWABLE UNDER THIS  SUBSECTION  FOR  ANY  TAXABLE
YEAR  SHALL  EXCEED  THE TAXPAYER'S TAX FOR SUCH YEAR, THE EXCESS MAY BE
CARRIED OVER TO THE FOLLOWING YEAR OR YEARS AND MAY BE DEDUCTED FROM THE
TAXPAYER'S TAX FOR SUCH YEAR OR YEARS.
  (2) FOR THE PURPOSES OF THIS  SUBSECTION  "QUALIFIED  SMALL  EMPLOYER"
SHALL  MEAN  AN  INDIVIDUAL  PROPRIETOR  WHO IS THE SOLE EMPLOYEE OF THE
BUSINESS OR AN EMPLOYER WITH NOT MORE THAN  FIFTY  EMPLOYEES  WHO  IS  A
"SMALL BUSINESS TAXPAYER" AS DEFINED IN PARAGRAPH (F) OF SUBDIVISION ONE
OF SECTION TWO HUNDRED TEN OF THIS CHAPTER.
  (3)  FOR  THE PURPOSES OF THIS SUBSECTION, THE TERM "HEALTH INSURANCE"
MEANS AN ACCIDENT AND HEALTH INSURANCE POLICY SUBJECT TO THE  PROVISIONS
OF  SECTION  THREE  THOUSAND  TWO  HUNDRED  SIXTEEN,  THREE THOUSAND TWO
HUNDRED TWENTY-ONE, FOUR THOUSAND THREE HUNDRED THREE OR  FOUR  THOUSAND
EIGHT  HUNDRED  ONE  OF THE INSURANCE LAW, AND ARTICLE FORTY-FOUR OF THE
PUBLIC HEALTH LAW AND SHALL INCLUDE "FREEDOM POLICIES" WHICH QUALIFY FOR
USE IN A HEALTH SAVINGS ACCOUNT PURSUANT TO SECTION 1201 OF THE  FEDERAL
MEDICARE PRESCRIPTION DRUG, IMPROVEMENT AND MODERNIZATION ACT OF 2003.
  S 9. Section 1456 of the tax law is amended by adding a new subsection
(f-1) to read as follows:
  (F-1)(1) A TAXPAYER WHO IS A QUALIFIED SMALL EMPLOYER SHALL BE ALLOWED
A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE EQUAL TO THE APPLICABLE
PERCENTAGE  OF  THE  PREMIUMS  PAID  DURING  THE TAXABLE YEAR FOR HEALTH
INSURANCE BY SUCH EMPLOYER. THE APPLICABLE PERCENTAGE SHALL BE (A)  FIVE
PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
SAND NINE, (B) TEN PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANU-
ARY  FIRST,  TWO  THOUSAND  TEN,  (C)  FIFTEEN PERCENT FOR TAXABLE YEARS
BEGINNING ON OR AFTER JANUARY FIRST, TWO  THOUSAND  ELEVEN,  (D)  TWENTY
PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
SAND  TWELVE,  (E) TWENTY-FIVE PERCENT FOR TAXABLE YEARS BEGINNING ON OR
AFTER JANUARY FIRST, TWO THOUSAND THIRTEEN, (F) THIRTY PERCENT FOR TAXA-
BLE YEARS BEGINNING ON OR AFTER JANUARY FIRST,  TWO  THOUSAND  FOURTEEN,
(G)  THIRTY-FIVE PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY
FIRST, TWO THOUSAND FIFTEEN, (H) FORTY PERCENT FOR TAXABLE YEARS  BEGIN-
NING   ON  OR  AFTER  JANUARY  FIRST,  TWO  THOUSAND  SIXTEEN,  AND  (I)
FORTY-THREE PERCENT FOR TAXABLE YEARS  BEGINNING  ON  OR  AFTER  JANUARY
FIRST, TWO THOUSAND SEVENTEEN.
  (2)  IN  NO EVENT SHALL THE CREDIT HEREIN PROVIDED FOR, AND CARRYOVERS
OF SUCH CREDIT, BE ALLOWED IN AN AMOUNT WHICH WILL REDUCE THE TAX  PAYA-
BLE  TO LESS THAN THE DOLLAR AMOUNT FIXED AS A MINIMUM TAX BY SUBSECTION
(B) OF SECTION FOURTEEN HUNDRED FIFTY-FIVE OF THIS ARTICLE. IF, HOWEVER,
THE AMOUNT OF CREDIT OR CARRYOVERS OF SUCH CREDIT,  OR  BOTH,  ALLOWABLE
UNDER  THIS  SUBSECTION  FOR  ANY  TAXABLE  YEAR REDUCES THE TAX TO SUCH
AMOUNT, ANY AMOUNT OF CREDIT OR  CARRYOVERS  OF  SUCH  CREDIT  THUS  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE YEAR MAY BE  CARRIED OVER TO THE FOLLOWING
YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH  YEAR
OR YEARS.
  (3) FOR THE PURPOSES OF THIS SECTION THE TERM "QUALIFIED SMALL EMPLOY-
ER"  SHALL MEAN AN INDIVIDUAL PROPRIETOR WHO IS THE SOLE EMPLOYEE OF THE
BUSINESS OR AN EMPLOYER WITH NOT MORE THAN  FIFTY  EMPLOYEES  WHO  IS  A
"SMALL BUSINESS TAXPAYER" AS DEFINED IN PARAGRAPH (F) OF SUBDIVISION ONE
OF SECTION TWO HUNDRED TEN OF THIS CHAPTER.

A. 2197                             9

  (4)  FOR  THE PURPOSES OF THIS SUBSECTION, THE TERM "HEALTH INSURANCE"
MEANS AN ACCIDENT AND HEALTH INSURANCE POLICY SUBJECT TO THE  PROVISIONS
OF  SECTION  THREE  THOUSAND  TWO  HUNDRED  SIXTEEN,  THREE THOUSAND TWO
HUNDRED TWENTY-ONE, FOUR THOUSAND THREE HUNDRED THREE OR  FOUR  THOUSAND
EIGHT  HUNDRED  ONE  OF THE INSURANCE LAW, AND ARTICLE FORTY-FOUR OF THE
PUBLIC HEALTH LAW AND SHALL INCLUDE "FREEDOM POLICIES" WHICH QUALIFY FOR
USE IN A HEALTH SAVINGS ACCOUNT PURSUANT TO SECTION 1201 OF THE  FEDERAL
MEDICARE PRESCRIPTION DRUG, IMPROVEMENT AND MODERNIZATION ACT OF 2003.
  S  10. Section 1511 of the tax law is amended by adding a new subdivi-
sion (y) to read as follows:
  (Y) SMALL EMPLOYER HEALTH CARE INSURANCE CREDIT. (1) A TAXPAYER  SHALL
BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE EQUAL TO THE
APPLICABLE  PERCENTAGE  OF THE PREMIUMS PAID DURING THE TAXABLE YEAR FOR
HEALTH INSURANCE BY SUCH EMPLOYER. THE APPLICABLE  PERCENTAGE  SHALL  BE
(A)  FIVE PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST,
TWO THOUSAND NINE, (B) TEN PERCENT FOR TAXABLE  YEARS  BEGINNING  ON  OR
AFTER  JANUARY  FIRST, TWO THOUSAND TEN, (C) FIFTEEN PERCENT FOR TAXABLE
YEARS BEGINNING ON OR AFTER JANUARY  FIRST,  TWO  THOUSAND  ELEVEN,  (D)
TWENTY  PERCENT  FOR  TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST,
TWO THOUSAND TWELVE, (E) TWENTY-FIVE PERCENT FOR TAXABLE YEARS BEGINNING
ON OR AFTER JANUARY FIRST, TWO THOUSAND THIRTEEN, (F) THIRTY PERCENT FOR
TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST,  TWO  THOUSAND  FOUR-
TEEN,  (G)  THIRTY-FIVE  PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER
JANUARY FIRST, TWO THOUSAND FIFTEEN, (H) FORTY PERCENT FOR TAXABLE YEARS
BEGINNING ON OR AFTER JANUARY  FIRST,  TWO  THOUSAND  SIXTEEN,  AND  (I)
FORTY-THREE  PERCENT  FOR  TAXABLE  YEARS  BEGINNING ON OR AFTER JANUARY
FIRST, TWO THOUSAND SEVENTEEN.
  (2) IN NO EVENT SHALL THE CREDIT HEREIN PROVIDED FOR BE ALLOWED IN  AN
AMOUNT  WHICH WILL REDUCE THE TAX PAYABLE TO LESS THAN THE MINIMUM FIXED
BY SUBDIVISION (A) OF SECTION FIFTEEN HUNDRED TWO OF THIS  ARTICLE.  IF,
HOWEVER,  THE  AMOUNT OF CREDIT ALLOWABLE UNDER THIS SUBDIVISION FOR ANY
TAXABLE YEAR REDUCES THE TAX TO SUCH AMOUNT, ANY AMOUNT  OF  CREDIT  NOT
DEDUCTIBLE  IN  SUCH  TAXABLE  YEAR MAY BE CARRIED OVER TO THE FOLLOWING
YEAR OR YEARS AND MAY BE DEDUCTED FROM THE TAXPAYER'S TAX FOR SUCH  YEAR
OR YEARS.
  (3)  FOR  THE  PURPOSES  OF THIS SUBDIVISION THE TERM "QUALIFIED SMALL
EMPLOYER" SHALL MEAN AN INDIVIDUAL PROPRIETOR WHO IS THE  SOLE  EMPLOYEE
OF THE BUSINESS OR AN EMPLOYER WITH NOT MORE THAN FIFTY EMPLOYEES WHO IS
A  "SMALL  BUSINESS TAXPAYER" AS DEFINED IN PARAGRAPH (F) OF SUBDIVISION
ONE OF SECTION TWO HUNDRED TEN OF THIS CHAPTER.
  (4) FOR THE PURPOSES OF THIS SUBDIVISION, THE TERM "HEALTH  INSURANCE"
MEANS  AN ACCIDENT AND HEALTH INSURANCE POLICY SUBJECT TO THE PROVISIONS
OF SECTION THREE  THOUSAND  TWO  HUNDRED  SIXTEEN,  THREE  THOUSAND  TWO
HUNDRED  TWENTY-ONE,  FOUR THOUSAND THREE HUNDRED THREE OR FOUR THOUSAND
EIGHT HUNDRED ONE OF THE INSURANCE LAW, AND ARTICLE  FORTY-FOUR  OF  THE
PUBLIC HEALTH LAW AND SHALL INCLUDE "FREEDOM POLICIES" WHICH QUALIFY FOR
USE  IN A HEALTH SAVINGS ACCOUNT PURSUANT TO SECTION 1201 OF THE FEDERAL
MEDICARE PRESCRIPTION DRUG, IMPROVEMENT AND MODERNIZATION ACT OF 2003.
  S 11. Section 606 of the tax law is amended by adding a new subsection
(h-1) to read as follows:
  (H-1) INDIVIDUAL ENROLLEE HEALTH INSURANCE CREDIT. A TAXPAYER SHALL BE
ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY THIS ARTICLE  EQUAL  TO  THE
APPLICABLE  PERCENTAGE  OF  THE PREMIUM PAID DURING THE TAXABLE YEAR FOR
HEALTH INSURANCE PURCHASED  PURSUANT  TO  SECTION  FOUR  THOUSAND  THREE
HUNDRED  TWENTY-ONE  OR  FOUR  THOUSAND  THREE HUNDRED TWENTY-TWO OF THE
INSURANCE LAW, INCLUDING "FREEDOM POLICIES" WHICH QUALIFY FOR USE  IN  A

A. 2197                            10

HEALTH  SAVINGS ACCOUNT PURSUANT TO SECTION 1201 OF THE FEDERAL MEDICARE
PRESCRIPTION DRUG, IMPROVEMENT AND MODERNIZATION ACT OF 2003. THE APPLI-
CABLE PERCENTAGE SHALL BE (1) FIVE PERCENT FOR TAXABLE  YEARS  BEGINNING
ON  OR AFTER JANUARY FIRST, TWO THOUSAND NINE, (2) TEN PERCENT FOR TAXA-
BLE YEARS BEGINNING ON OR AFTER JANUARY FIRST,  TWO  THOUSAND  TEN,  (3)
FIFTEEN  PERCENT  FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST,
TWO THOUSAND ELEVEN, (4) TWENTY PERCENT FOR TAXABLE YEARS  BEGINNING  ON
OR AFTER JANUARY FIRST, TWO THOUSAND TWELVE, (5) TWENTY-FIVE PERCENT FOR
TAXABLE  YEARS  BEGINNING  ON OR AFTER JANUARY FIRST, TWO THOUSAND THIR-
TEEN, (6) THIRTY PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY
FIRST, TWO THOUSAND FOURTEEN, (7) THIRTY-FIVE PERCENT FOR TAXABLE  YEARS
BEGINNING  ON  OR  AFTER  JANUARY FIRST, TWO THOUSAND FIFTEEN, (8) FORTY
PERCENT FOR TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
SAND SIXTEEN, AND (9) FORTY-THREE PERCENT FOR TAXABLE YEARS BEGINNING ON
OR AFTER JANUARY FIRST, TWO THOUSAND SEVENTEEN.
  S 12. Subsection (c) of section 4326 of the insurance law, as added by
chapter 1 of the laws of 1999,  subparagraph  (A)  of  paragraph  1  and
subparagraph (C) of paragraph 3 as amended by chapter 419 of the laws of
2000, is amended to read as follows:
  (c)  The  following  definitions  shall be applicable to the insurance
contracts offered under the program established by this section:
  (1) A qualifying small employer is an employer that is either:
  (A) An individual proprietor who is the only employee of the business:
  (i) without health insurance which provides  benefits  on  an  expense
reimbursed  or  prepaid  basis  in effect during the twelve month period
prior to application for a qualifying group  health  insurance  contract
under the program established by this section; and
  (ii)  resides in a household having a net household income at or below
two hundred [eight] FIFTY percent of the non-farm federal poverty  level
(as  defined  and  updated by the federal department of health and human
services) or the gross equivalent of such net income;
  (iii) except that the requirements set  forth  in  item  (i)  of  this
subparagraph  shall not be applicable where an individual proprietor had
health insurance coverage during the previous  twelve  months  and  such
coverage  terminated  due  to  one of the reasons set forth in items (i)
through (viii) of subparagraph (C) of paragraph three of THIS subsection
[(c) of this section]; or
  (B) An employer with:
  (i) not more than fifty eligible employees;
  (ii) no group health insurance which provides benefits on  an  expense
reimbursed  or  prepaid  basis  covering  employees in effect during the
twelve month period prior to application for a qualifying  group  health
insurance contract under the program established by this section; and
  (iii)  at  least  thirty  percent  of its eligible employees receiving
annual wages from the employer at a level equal to or less  than  thirty
thousand  dollars.  The  thirty thousand dollar figure shall be adjusted
periodically pursuant to subparagraph (F) of this paragraph.
  (C) The requirements set forth in item (i) of subparagraph (A) of this
paragraph and in item (ii) of subparagraph (B) of this  paragraph  shall
not  be  applicable where an individual proprietor or employer is trans-
ferring from a health insurance contract issued pursuant to the New York
state small business health insurance partnership program established by
section nine hundred twenty-two of the public health law or from  health
care  coverage issued pursuant to a regional pilot project for the unin-
sured established by section one thousand one hundred eighteen  of  this
chapter.

A. 2197                            11

  (D)  The twelve month period set forth in item (i) of subparagraph (A)
of this paragraph and in item (ii) of subparagraph (B) of this paragraph
may be adjusted by the superintendent from  twelve  months  to  eighteen
months  if he determines that the twelve month period is insufficient to
prevent  inappropriate  substitution of other health insurance contracts
for qualifying group health insurance contracts.
  (E) An individual proprietor or employer shall cease to be a  qualify-
ing small employer if any health insurance which provides benefits on an
expense  reimbursed  or prepaid basis covering the individual proprietor
or an employer's employees, other than qualifying group health insurance
purchased pursuant to this section,  is  purchased  or  otherwise  takes
effect subsequent to purchase of qualifying group health insurance under
the program established by this section.
  (F)  The  wage  levels  utilized in subparagraph (B) of this paragraph
shall be adjusted annually, beginning in two thousand two.  The  adjust-
ment  shall  take effect on July first of each year. For July first, two
thousand two, the adjustment shall be a percentage of  the  annual  wage
figure  specified  in subparagraph (B) of this paragraph. For subsequent
years, the adjustment shall be a percentage of the  annual  wage  figure
which  took  effect  on  July  first  of  the prior year. The percentage
adjustment shall be the same percentage  by  which  the  current  year's
non-farm  federal  poverty  level, as defined and updated by the federal
department of health and human services,  for  a  family  unit  of  four
persons  for  the  forty-eight  contiguous  states and Washington, D.C.,
changed from the same level established for the prior year.
  (2) A qualifying group health insurance contract is a  group  contract
purchased from a health maintenance organization, corporation or insurer
by  a qualifying small employer which provides the benefits set forth in
subsection (d) of this section. The contract must insure not  less  than
fifty percent of the employees eligible for coverage.
  (3) (A) A qualifying individual is an employed person:
  (i)  who  does not have and has not had health insurance with benefits
on an expense reimbursed or prepaid basis during the twelve month period
prior to the individual's application for  health  insurance  under  the
program established by this section;
  (ii)  whose  employer  does not provide group health insurance and has
not provided group health insurance with benefits on  an  expense  reim-
bursed  or  prepaid basis covering employees in effect during the twelve
month period prior to the individual's application for health  insurance
under the program established by this section;
  (iii)  [resides] RESIDING in a household having a net household income
at or below two hundred [eight] FIFTY percent of  the  non-farm  federal
poverty  level  (as  defined  and  updated  by the federal department of
health and human services) or the gross equivalent of such net income[;]
and
  [(iv)] WHO is ineligible for Medicare.
  (B) The requirements set forth in items (i) and (ii)  of  subparagraph
(A)  of  this  paragraph  shall not be applicable where an individual is
transferring from a health insurance contract  issued  pursuant  to  the
voucher  insurance  program  established  by  section  one  thousand one
hundred twenty-one of this chapter, a health insurance  contract  issued
pursuant  to the New York state small business health insurance partner-
ship program established by  section  nine  hundred  twenty-two  of  the
public  health law or health care coverage issued pursuant to a regional
pilot project for the uninsured established by section one thousand  one
hundred eighteen of this chapter.

A. 2197                            12

  (C)  The  requirements set forth in items (i) and (ii) of subparagraph
(A) of this paragraph shall not be applicable where  an  individual  had
health  insurance  coverage  during  the previous twelve months and such
coverage terminated due to:
  (i) loss of employment due to factors other than voluntary separation;
  (ii) death of a family member which results in termination of coverage
under a health insurance contract under which the individual is covered;
  (iii)  change  to  a  new  employer that does not provide group health
insurance with benefits on an expense reimbursed or prepaid basis;
  (iv) change of residence so that no  employer-based  health  insurance
with benefits on an expense reimbursed or prepaid basis is available;
  (v) discontinuation of a group health insurance contract with benefits
on  an expense reimbursed or prepaid basis covering the qualifying indi-
vidual as an employee or dependent;
  (vi) expiration of the coverage periods established by  the  continua-
tion  provisions  of  the  Employee  Retirement  Income Security Act, 29
U.S.C.   section 1161 et seq. and the  Public  Health  Service  Act,  42
U.S.C.   section 300bb-1 et seq. established by the Consolidated Omnibus
Budget Reconciliation Act of  1985,  as  amended,  or  the  continuation
provisions of subsection (m) of section three thousand two hundred twen-
ty-one,  subsection  (k) of section four thousand three hundred four and
subsection (e) of section four thousand three hundred five of this chap-
ter;
  (vii) legal separation, divorce or annulment which results  in  termi-
nation  of  coverage  under  a health insurance contract under which the
individual is covered; or
  (viii) loss of eligibility under a group health plan.
  (D) The twelve month period set forth in items (i) and (ii) of subpar-
agraph (A) of this paragraph may be adjusted by the superintendent  from
twelve  months to eighteen months if he determines that the twelve month
period is insufficient to prevent inappropriate  substitution  of  other
health  insurance  contracts  for qualifying individual health insurance
contracts.
  (4) A qualifying individual health insurance contract is an individual
contract issued directly to a qualifying individual and  which  provides
the  benefits set forth in subsection (d) of this section. At the option
of the qualifying individual, such contract  may  include  coverage  for
dependents of the qualifying individual.
  (5)  A  QUALIFYING  INDIVIDUAL  RESIDING  IN  A HOUSEHOLD HAVING A NET
INCOME ABOVE TWO HUNDRED FIFTY PERCENT OF THE NON-FARM POVERTY LEVEL (AS
DEFINED AND UPDATED BY  THE  FEDERAL  DEPARTMENT  OF  HEALTH  AND  HUMAN
SERVICES)  OR  THE GROSS EQUIVALENT OF SUCH NET INCOME SHALL BE ELIGIBLE
TO  PURCHASE  A  QUALIFYING  INDIVIDUAL   HEALTH   INSURANCE   CONTRACT.
PROVIDED, HOWEVER, PREMIUMS SHALL BE PAID TO THE INSURER OR HEALTH MAIN-
TENANCE  ORGANIZATION  AT  A  RATE  WHICH  DOES  NOT  INCLUDE  ACTUARIAL
REDUCTIONS DERIVED FROM THE MARKET STABILIZATION POOLS CREATED  PURSUANT
TO SECTION THREE THOUSAND TWO HUNDRED THIRTY-THREE OF THIS CHAPTER.
  S  13.  Paragraphs  4  and  6 of subsection (e) of section 4326 of the
insurance law, as added by chapter 1 of the laws of 1999, are amended to
read as follows:
  (4) emergency services shall have a [fifty] ONE HUNDRED dollar  copay-
ment  which  must be waived if hospital admission results from the emer-
gency room visit;
  (6) the maximum coverage for prescription drugs shall be [three]  FIVE
thousand dollars per individual in a calendar year; and

A. 2197                            13

  S 14. Subsection (g) of section 4326 of the insurance law, as added by
chapter 1 of the laws of 1999, is amended to read as follows:
  (g)  The  superintendent shall be authorized to modify, by regulation,
the copayment and deductible amounts described in this  section  if  the
superintendent  determines  such amendments are necessary to [facilitate
implementation of this section] MAINTAIN THE PROGRAM. On or after  Janu-
ary  first,  two thousand two, the superintendent shall be authorized to
establish, by regulation, one or  more  additional  standardized  health
insurance  benefit  packages if the superintendent determines additional
benefit packages with different levels of benefits are necessary to meet
the needs of the public.
  S 15. Subsections (b) and (e) of section 4327 of the insurance law, as
added by chapter 1 of the laws of 1999, are amended to read as follows:
  (b) Commencing on January first, two thousand one, health  maintenance
organizations,  corporations  or  insurers  shall be eligible to receive
reimbursement for ninety percent of claims paid between thirty  thousand
and one hundred thousand dollars AND COMMENCING JANUARY FIRST, TWO THOU-
SAND  TEN,  HEALTH  MAINTENANCE  ORGANIZATIONS, CORPORATIONS OR INSURERS
SHALL BE ELIGIBLE FOR REIMBURSEMENT FOR  NINETY  PERCENT  OF  CLAIMS  IN
EXCESS  OF  FIVE  HUNDRED  THOUSAND  DOLLARS  in a calendar year for any
member covered under a standardized contract issued pursuant to  section
four  thousand three hundred twenty-six of this article. Claims paid for
members covered under qualifying group health insurance contracts  shall
be  reimbursable from the small employer stop loss fund. Claims paid for
members covered under qualifying individual health  insurance  contracts
shall be reimbursable from the qualifying individual stop loss fund. For
the  purposes  of  this section, claims shall include health care claims
paid by a health maintenance organization on behalf of a covered  member
pursuant to such standardized contracts.
  (e)  Claims  shall be reported and funds shall be distributed from the
small employer stop loss fund and from the  qualifying  individual  stop
loss  fund  on  a  calendar  year  basis.  Claims  shall be eligible for
reimbursement only for the calendar year in which the claims  are  paid.
[Once  claims  paid  on  behalf  of a covered member reach or exceed one
hundred thousand dollars in a given calendar  year,  no  further  claims
paid  on  behalf  of such member in that calendar year shall be eligible
for reimbursement.]
  S 16. Subsections (a) and (c) of section 4321-a of the insurance  law,
as  added  by  chapter  1  of  the  laws of 1999, are amended to read as
follows:
  (a) The superintendent shall establish a fund from which health  main-
tenance  organizations may receive reimbursement, to the extent of funds
available therefor, for claims paid by such health maintenance organiza-
tions for members covered under standardized individual enrollee  direct
payment contracts issued pursuant to section four thousand three hundred
twenty-one  of  this article. The fund established by the superintendent
pursuant to this section shall be known as the direct payment stop  loss
fund.  Commencing  in  calendar  year  two  thousand, health maintenance
organizations shall be eligible to receive reimbursement from the direct
payment stop loss fund for ninety percent of claims paid between  twenty
thousand  and  one hundred thousand dollars, AS WELL AS CLAIMS IN EXCESS
OF FIVE HUNDRED THOUSAND DOLLARS, in a  calendar  year  for  any  member
covered  under a contract issued pursuant to section four thousand three
hundred twenty-one of this article. For the purposes  of  this  section,
claims  shall  include  health  care claims paid by a health maintenance

A. 2197                            14

organization on behalf of a covered member pursuant to such standardized
direct payment contracts.
  (c)  Claims  shall  be  reported  and  funds shall be distributed on a
calendar year basis. Claims shall be eligible for reimbursement only for
the calendar year in which the claims are  paid.  Once  claims  paid  on
behalf  of  a  member  reach or exceed one hundred thousand dollars in a
given calendar year, no further claims paid on behalf of such member  in
such  calendar year shall be eligible for reimbursement UNTIL THE CLAIMS
REACH FIVE HUNDRED THOUSAND DOLLARS.
  S 17. Subsections (a) and (c) of section 4322-a of the insurance  law,
as  added  by  chapter  1  of  the  laws of 1999, are amended to read as
follows:
  (a) The superintendent shall establish a fund from which health  main-
tenance  organizations may receive reimbursement, to the extent of funds
available therefor, for claims paid by such health maintenance organiza-
tions for members covered under standardized individual enrollee  direct
payment  contracts which provide out-of-plan benefits issued pursuant to
section four thousand three hundred twenty-two of this article. The fund
established by the superintendent pursuant  to  this  section  shall  be
known  as "the direct payment out-of-plan stop loss fund". Commencing in
calendar year two thousand, health maintenance  organizations  shall  be
eligible  to  receive  reimbursement from the direct payment out-of-plan
stop loss fund for ninety percent of claims paid between twenty thousand
and one hundred thousand dollars, AS WELL AS CLAIMS IN  EXCESS  OF  FIVE
HUNDRED  THOUSAND  DOLLARS,  in  a  calendar year for any member covered
under a contract issued pursuant to section four thousand three  hundred
twenty-two  of  this  article.  For the purposes of this section, claims
shall include health care claims paid by a health maintenance  organiza-
tion on behalf of a covered member pursuant to contracts issued pursuant
to section four thousand three hundred twenty-two of this article.
  (c)  Claims  shall  be  reported  and  funds shall be distributed on a
calendar year basis. Claims shall be eligible for reimbursement only for
the calendar year in which the claims are  paid.  Once  claims  paid  on
behalf  of  a  member  reach or exceed one hundred thousand dollars in a
given calendar year, no further claims paid on behalf of such member  in
that  calendar year shall be eligible for reimbursement UNTIL THE CLAIMS
REACH FIVE HUNDRED THOUSAND DOLLARS.
  S 18. Subsection (b) of section 3231 of the insurance law, as  amended
by chapter 557 of the laws of 2002, is amended to read as follows:
  (b)  Nothing  herein shall prohibit the use of premium rate structures
to establish different premium rates for individuals as opposed to fami-
ly units or separate community rates for individuals as opposed to small
groups.  NOTHING HEREIN SHALL REQUIRE THAT  ALL  PRODUCTS  IN  THE  SAME
COMMUNITY  POOL  HAVE  AN  IDENTICAL  CHANGE  IN PREMIUM; AN INSURER MAY
SUBSEQUENTLY INCREASE OR DECREASE  THE  PREMIUM  OF  ONE  PRODUCT  BY  A
DIFFERENT PERCENTAGE THAN ANOTHER PRODUCT BASED ON DIFFERING UTILIZATION
OR  OTHER  FACTORS  (AS  DETERMINED  BY  THE  INSURER), EVEN THOUGH BOTH
PRODUCTS ARE IN THE SAME COMMUNITY POOL. If an insurer  is  required  to
issue a contract to individual proprietors pursuant to subsection (i) of
this  section,  such  policy  shall be subject to subsection (a) of this
section.
  S 19. Subsection (b) of section 4317 of the insurance law, as  amended
by chapter 557 of the laws of 2002, is amended to read as follows:
  (b)  Nothing  herein shall prohibit the use of premium rate structures
to establish different premium rates for individuals as opposed to fami-
ly units or separate community rates for individuals as opposed to small

A. 2197                            15

groups.  NOTHING HEREIN SHALL REQUIRE THAT  ALL  PRODUCTS  IN  THE  SAME
COMMUNITY  POOL  HAVE  AN  IDENTICAL  CHANGE  IN PREMIUM; AN INSURER MAY
SUBSEQUENTLY INCREASE OR DECREASE  THE  PREMIUM  OF  ONE  PRODUCT  BY  A
DIFFERENT PERCENTAGE THAN ANOTHER PRODUCT BASED ON DIFFERING UTILIZATION
OR  OTHER  FACTORS  (AS  DETERMINED  BY  THE  INSURER), EVEN THOUGH BOTH
PRODUCTS ARE IN THE SAME COMMUNITY POOL. If a corporation is required to
issue a contract to individual proprietors pursuant to subsection (f) of
this section, such contract shall be  subject  to  the  requirements  of
subsection (a) of this section.
  S 20. Subdivision 3 of section 4401 of the public health law, as added
by chapter 938 of the laws of 1976, is amended to read as follows:
  3.  "Comprehensive  health  services"  means all those health services
which an enrolled population might require in order to be maintained  in
good  health,  and shall include, but shall not be limited to, physician
services (including consultant and referral  services),  in-patient  and
out-patient hospital services, diagnostic laboratory and therapeutic and
diagnostic  radiologic  services,  and  emergency  and preventive health
services. Such term may be further defined by  agreement  with  enrolled
populations providing additional benefits necessary, desirable or appro-
priate  to meet their health care needs.  NOTWITHSTANDING THE PRECEDING,
IN THE CASE OF GROUPS WITH FIFTY-ONE OR MORE EMPLOYEES,  SUBSCRIBERS  OR
MEMBERS,  EXCLUSIVE  OF  SPOUSES  AND  DEPENDENTS,  A HEALTH MAINTENANCE
ORGANIZATION MAY OFFER CONTRACTS WITH  THOSE  DEDUCTIBLES,  COINSURANCE,
COPAYMENTS  AND  OTHER  LIMITATIONS  ON  BENEFITS NECESSARY TO MATCH THE
BENEFITS OF THE OTHER HEALTH BENEFIT OFFERINGS OF SUCH GROUPS AND THERE-
BY ATTEMPT TO AVOID ADVERSE SELECTION.
  S 21. Subdivision 1 of section 4406  of  the  public  health  law,  as
amended  by  chapter  342  of  the  laws  of 2004, is amended to read as
follows:
  1. The contract between  a  health  maintenance  organization  and  an
enrollee  shall  be subject to regulation by the superintendent as if it
were a health insurance subscriber contract, and shall include, but  not
be  limited to, all mandated benefits required by article forty-three of
the insurance law. Such contract shall fully and clearly state the bene-
fits and limitations therein provided or imposed, so  as  to  facilitate
understanding  and  comparisons,  and to exclude provisions which may be
misleading or unreasonably confusing. Such contract shall be  issued  to
any  individual and dependents of such individual and any group of fifty
or fewer employees or members, exclusive of spouses and  dependents,  or
any  employee or member of the group, including dependents, applying for
such contract at any time throughout the year, and may include a pre-ex-
isting condition provision as provided  for  in  section  four  thousand
three  hundred  eighteen  of  the insurance law, provided, however, that
such requirements shall not apply to a health  maintenance  organization
exclusively  serving  individuals  enrolled  pursuant to title eleven of
article five of the social services law, title eleven-D of article  five
of  the  social  services law, title one-A of article twenty-five of the
public health law or title eighteen of the federal Social Security  Act,
and,  further  provided, that such health maintenance organization shall
not discontinue a contract for an  individual  receiving  comprehensive-
type coverage in effect prior to January first, two thousand four who is
ineligible to purchase policies offered after such date pursuant to this
section or section four thousand three hundred twenty-two of [this arti-
cle]  THE  INSURANCE  LAW  due  to the provision of 42 U.S.C.  1395ss in
effect prior to January first, two thousand four; AND PROVIDED  FURTHER,
HOWEVER,  THAT  IN  THE CASE OF LARGE GROUPS NOT SUBJECT TO SECTION FOUR

A. 2197                            16

THOUSAND THREE HUNDRED SEVENTEEN OF THE INSURANCE LAW THE HEALTH MAINTE-
NANCE ORGANIZATION MAY APPLY THE SAME MINIMUM  PARTICIPATION  AND  OTHER
ENROLLMENT STANDARDS AS AN INSURER IS PERMITTED TO APPLY PURSUANT TO THE
INSURANCE  LAW.  Subject  to  the  creditable  coverage  requirements of
subsection (a) of section four thousand three hundred  eighteen  of  the
insurance  law,  the organization may, as an alternative to the use of a
pre-existing condition provision, elect to  offer  contracts  without  a
pre-existing  condition  provision  to  such groups but may require that
coverage shall not become effective until after a specified  affiliation
period of not more than sixty days after the application for coverage is
submitted.  The  organization  is  not  required  to provide health care
services or benefits during such period and no premium shall be  charged
for  any  coverage  during  the  period.   After January first, nineteen
hundred ninety-six, all individual direct  payment  contracts  shall  be
issued  only pursuant to sections four thousand three hundred twenty-one
and four thousand three hundred twenty-two of the  insurance  law.  Such
contracts may not, with respect to an eligible individual (as defined in
section  2741(b)  of  the federal Public Health Service Act, 42 U.S.C. S
300gg-41(b)), impose any pre-existing condition exclusion.
  S 22. Section 4406 of the public health law is amended by adding a new
subdivision 5 to read as follows:
  5. NOTWITHSTANDING ANY OTHER LAW, REGULATION OR  DEPARTMENTAL  POLICY,
IN  THE  CASE  OF  OFFERINGS TO GROUPS WITH FIFTY-ONE OR MORE EMPLOYEES,
SUBSCRIBERS OR MEMBERS, EXCLUSIVE OF SPOUSES AND  DEPENDENTS,  A  HEALTH
MAINTENANCE ORGANIZATION MAY ELECT NOT TO OFFER COVERAGE TO THE GROUP AS
A WHOLE IF THE BENEFIT PACKAGES OF THE OTHER PLANS OFFERED BY THE GROUP,
OR THE AMOUNTS CONTRIBUTED BY THE GROUP TOWARDS THE PREMIUMS, ARE LIKELY
TO PROMOTE ADVERSE SELECTION.
  S  23.  Section  2406  of the insurance law is amended by adding a new
subsection (f) to read as follows:
  (F) ALL FINES AND  PENALTIES  PAID  AND  COLLECTED  PURSUANT  TO  THIS
SECTION  SHALL  BE  DEPOSITED  IN  AND DISTRIBUTED THROUGH POOLS CREATED
PURSUANT TO SECTION THREE THOUSAND  TWO  HUNDRED  THIRTY-THREE  OF  THIS
CHAPTER ESTABLISHED AND OPERATED FOR THE PURPOSE OF MARKET STABILIZATION
MECHANISMS  FOR INDIVIDUAL, SMALL GROUP AND MEDICARE SUPPLEMENTAL INSUR-
ANCE.
  S 24. This act shall take effect January 1,  2010;  provided,  however
that the empire state film production credit under subsection (gg) , the
empire  state commercial production credit under subsection (jj) and the
credit for companies who  provide  transportation  to  individuals  with
disabilities  under  subsection  (oo)  of  section  606  of  the tax law
contained in section seven of this act shall expire on the same date  as
provided  in  section  9 of part P of chapter 60 of the laws of 2004, as
amended, section 10 of part V of chapter 62 of  the  laws  of  2006,  as
amended  and  section  5 of chapter 522 of the laws of 2006, as amended,
respectively.