BILL NUMBER: S3019

SPONSOR: KENNEDY
 
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 estab-
lishment of reasonable time periods in which the department shall review
              

rate requests and providing the department with sufficient resources to
accomplish such tasks.

 
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 detri-
mental and unfair financial situation.

 
PRIOR LEGISLATIVE HISTORY:

2012: S.6486 Referred to Insurance
2013-14 S.381 Referred to Insurance
2015-16: S.666/A.1048 Referred to Insurance
2018-18: S.1839 Referred to Insurance

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
Immediately.