BILL NUMBER:S381

TITLE OF BILL:
An act
to amend the insurance law, in relation to the powers and duties of the
superintendent of financial services

PURPOSE OR GENERAL IDEA OF BILL:
This bill authorizes and directs the superintendent of the Department
of Financial Services to promulgate rules and regulations necessary
to prohibit retroactive charge-backs of health insurance rates.

SUMMARY OF SPECIFIC PROVISIONS:
The insurance law is amended by adding a new section 215 to authorize
and direct the superintendent of the Department of Financial Services
to promulgate rules and regulations necessary to prohibit retroactive
charge-backs of health insurance rates. These shall include the
establishment of reasonable time periods in which the department
shall review rate requests and providing the department with
sufficient resources to accomplish such tasks.

EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER:
Existing law does not prohibit retroactive charge-backs of health
insurance rate increases that are approved by the Department of
Financial Services.

              

JUSTIFICATION:
Current law allows that subscribers of health insurance can be
required to pay an additional premium for past coverage when the
Department of Financial Services approves a requested rate increase,
and applies it retroactively. These charges can be devastating to
small businesses and those who are self-employed.

In one case, an insurance carrier applied to the Department of
Financial Services in late March for a substantial, mid-year rate
increase, and asked that it take effect on July 1st. The Insurance
department finally approved the rate increase in early September, and
also allowed the carrier to charge the increase back to August 1st.
The small business and its employees who were routinely billed one
month in advance for their August, September and October health
insurance - now suddenly owed thousands of dollars. without payment,
their health coverage could be in jeopardy for a portion of that
period.

State law does require insurance carriers to inform subscribers of a
potential rate increase at least 30 days prior to the proposed
effective date. In practice, however, the advance notification is
ineffective because:

* Small business owners and the self-employed are not typically in a
position to suddenly change their coverage or carrier. They do not
know whether the Insurance Department of Financial Services will
actually approve the requested increase. Without this knowledge, they
cannot make informed choices about their available options.


* There is no good reason to assume the above subscribers would
suspect that a future rate will be charged to them retroactively.

This is an unacceptable way to conduct business in New York or any
other state. This bill would ensure that those who work so hard to
provide insurance for their families and employees are not placed in
a potentially detrimental and unfair financial situation.

PRIOR LEGISLATIVE HISTORY:
2012:  S.6486 Referred to Insurance

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately.