BILL NUMBER: S3660A

SPONSOR: GRIFFO
 
TITLE OF BILL:  An act authorizing municipalities to join a county
self-funded or self-insured health plan

 
PURPOSE:

Self-insurance or self-funding for health insurance is significantly
less expensive than contracting out to private health insurers but
requires a sufficient number of employees to be economically possible.
Accordingly, at least 19 Counties currently self-insure. On the other
hand, most municipalities, including school districts, do not have
enough employees to self-insure. This bill allows them to do so by
giving them the potential to join County self-insurance plans.

 
SUMMARY OF PROVISIONS:

Section 1. A municipality is permitted to join a county self-funded or
self-insured health plan in any county in which such municipality is
located in whole or in part. Municipality is defined as any city, town,
              

village or any other municipal corporation, a school district or any
governmental entity operating a public school, college or university,
public improvement or special district, public authority, commission, or
public benefit corporation, or any other public corporation, agency or
instrumentality or unit of government which exercises governmental
powers under the laws of the state should the self-insured county and
the municipality or municipalities conjoined meet the following require-
ments:

1 That it maintain a reserve fund, calculated as a percentage of total
annual incurred claims, of a minimum of 13% and a maximum of 15% of
medical claims and a minimum of 4% of prescription claims.

2. It has in effect a Specific Stop Loss per individual claim only, no
aggregate, and with a minimum deductible of $200,00 to $250,000.

3. It has a minimum of 1,000 covered lives including retirees, but not
including dependents.

4. The plan has in effect an agreement between itself and any munici-
palities that have joined the plan such that the plan satisfies the
contingent liability provisions set forth in section 4708 of the Insur-
ance Law.

Section 2: Effective date .

 
JUSTIFICATION:

Municipalities and the New York State Association of Counties have
requested and support the bill. In addition, certain health insurers are
preparing for the inevitability of self-insurance plans, by establishing
departments that serve such plans. The role of the private insurer is
reduced, since the private insurer no longer handles plan funds, nor
does it profit from plan funds, but is still needed for claims process-
ing and may charge fees for doing so.

The revised bill was developed after discussion with the Department of
Financial Services (DFS) and self-insurance consultants. DFS does not
regulate self-insured plans. Therefore, DFS favors municipal consortia
to be formed pursuant to Article 47 of the Insurance Law.  However,
Article 47 has deterred the formation of municipal health insurance
consortia due to the time and cost involved in seeking DFS approval to
such a remarkable extent that only one county has formed such a consor-
tium which incorporates constituent municipalities. This law allows
municipalities to join county self-insured health plans so long as
certain criteria are met, criteria which DFS would typically require in
the formation of a consortium. Thus, the bill further a DFS goal to
enhance the financial stability of county self-insured health plans by
making sure that certain requirements be met if they wish to admit addi-
tional municipalities into the plan, but at the same time guarantees
municipalities access to a self-insured plan without having to create
one from scratch.  Since self-insured health plans provide the greatest
array of benefits at lowest cost, allowing municipalities to join these
plans will benefit the taxpayers and municipal employees alike.

 
LEGISLATIVE HISTORY:

2015/2016: S.4466/A.739 Referred to Insurance
2013/2014: S.6633/A.8362-A Referred to Insurance

 
FISCAL IMPLICATIONS:

Only positive. By bringing in more members to a County self-insured
plan, spreading of risk is enhanced, and costs to the County and its
employees are potentially reduced. In addition, municipal costs are
reduced by paying less for health insurance, which is critical in a tax
cap environment. Employee costs are likewise reduced. For example, the
Albany County self-insured health plan costs employees approximately 50%
less than NYSHIP.

 
EFFECTIVE DATE:
Immediate.