Relates to pre-existing condition provisions for group and blanket disability policies which excludes coverage under the policy for a disability commencing during the twelve months following the effective date of coverage for the covered person.
Ayes (60): Adams, Addabbo, Ball, Bonacic, Boyle, Breslin, Carlucci, DeFrancisco, Dilan, Espaillat, Farley, Felder, Flanagan, Fuschillo, Gallivan, Gianaris, Gipson, Golden, Griffo, Grisanti, Hannon, Hassell-Thomps, Hoylman, Kennedy, Klein, Krueger, Lanza, Larkin, Latimer, LaValle, Libous, Little, Marcellino, Marchione, Maziarz, Montgomery, Nozzolio, O'Brien, O'Mara, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Rivera, Robach, Sampson, Sanders, Savino, Serrano, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Tkaczyk, Valesky, Young, Zeldin
Nays (2): Avella, Diaz
Excused (1): Martins
TITLE OF BILL: An act to amend the insurance law, in relation to preexisting condition provisions for group and blanket disability policies
PURPOSE: This bill would amend § 3234 of the insurance law to require disability income insurers to make available to employers who purchase group or blanket disability insurance the option of a contract with a preexisting condition exclusion provision This bill would require insurers to offer employers a group disability contract with a provision that establishes that a pre-existing condition that occurs prior to an employee's effective date of coverage, and results in the disability of that employee within the first twelve months after the effective date of coverage, would be excluded from coverage. Insurers would also be required to offer to employers a contract that would limit but not exclude disability coverage for pre-existing conditions Employers could choose which of these options they want in their contract.
SUMMARY OF PROVISIONS: Section 1 of the bill amends § 3234 of the insurance law by adding a new subsection (b) to require that insurers must make available to employers a pre-existing condition exclusion provision in all group and blanket disability Contracts being, offered. Such exclusion would provide that a pre-existing condition that occurs prior to an employee's effective date of coverage, and results in the disability of that employee within the first twelve months after the effective date of coverage, would be excluded from coverage for loss of income. Section 1 also re-letters current subsection (b) as new subsection (c) and makes conforming changes to the new subsection.
JUSTIFICATION: Due to a recent Court of Appeals decision (Benesowitz v Metropolitan Life Insurance Company, 8 NY3d 661 2007) which reinterpreted § 3234 (a) (2) of the insurance law, insurers and businesses in New York were required to revise what was previously considered to be a preexisting condition exclusion provision in group disability income insurance contracts and instead apply it as a limitation on coverage only for up to twelve months following the employee's effective date of coverage. As a result, employees who become disabled due to a pre-existing condition are no longer excluded from coverage for the life of that claim. This decision permits some seriously ill employees to obtain coverage and then almost immediately file a claim and will result, in some cases, in an increase in the premiums charged for group disability income policies in New York These increased rates would be for a type of coverage that can already be quite costly far businesses/employees to afford and any increase in rates might preclude this coverage from being purchased or continued altogether.
Giving employers the choice of which option to purchase will result in more New Yorkers being offered disability coverage. Those companies that can afford the more expensive benefit could elect to provide that, whereas those who cannot can purchase the contract with the less expensive benefit option.
LEGISLATIVE HISTORY: S.2557 of 2011-12; S.4770 of 2009-10
FISCAL IMPLICATIONS: None to the State.
EFFECTIVE DATE: Immediately.
STATE OF NEW YORK ________________________________________________________________________ 2886 2013-2014 Regular Sessions IN SENATE January 24, 2013 ___________Introduced by Sen. SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance AN ACT to amend the insurance law, in relation to pre-existing condition provisions for group and blanket disability policies THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subsection (b) of section 3234 of the insurance law, as added by chapter 650 of the laws of 1993, is amended to read as follows: (b) AN INSURER THAT OFFERS A POLICY IN CONFORMANCE WITH PARAGRAPH TWO OF SUBSECTION (A) OF THIS SECTION MUST ALSO MAKE AVAILABLE, AND IF REQUESTED BY THE POLICYHOLDER, PROVIDE A GROUP OR BLANKET POLICY WITH A PRE-EXISTING CONDITION PROVISION WHICH EXCLUDES COVERAGE UNDER THE POLI- CY FOR A DISABILITY COMMENCING DURING THE TWELVE MONTHS FOLLOWING THE EFFECTIVE DATE OF COVERAGE FOR THE COVERED PERSON. (C) Nothing
[herein]IN THIS SECTION shall be construed to prohibit or restrict an insurer from utilizing other forms of underwriting for the members of the group in lieu of, or in addition to, the pre-existing condition provision described in subsection (a) OR (B) of this section. S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD06548-01-3