Bill S6486-2011

Authorizes superintendent of insurance to promulgate rules and regulations necessary to prohibit retroactive charge-backs of health insurance rates

Authorizes superintendent of financial services to promulgate rules and regulations necessary to prohibit retroactive charge-backs of health insurance rates.

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  • Feb 15, 2012: REFERRED TO INSURANCE

Memo

BILL NUMBER:S6486               REVISED 02/17/12

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: New Bill. Same As A92.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Immediately.


Text

STATE OF NEW YORK ________________________________________________________________________ 6486 IN SENATE February 15, 2012 ___________
Introduced by Sen. KENNEDY -- 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 the powers and duties of the superintendent of financial services THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. The insurance law is amended by adding a new section 215 to read as follows: S 215. SUPERINTENDENT TO PROHIBIT RETROACTIVE APPLICATIONS OF A RESULTING RATE CHANGE. THE SUPERINTENDENT SHALL PROMULGATE RULES AND REGULATIONS TO PROHIBIT RETROACTIVE APPLICATIONS OF A RESULTING RATE CHANGE. SUCH RULES AND REGULATIONS SHALL INCLUDE, BUT NOT BE LIMITED TO, ESTABLISHING REASONABLE TIME PERIODS IN WHICH THE DEPARTMENT SHALL REVIEW RATE REQUESTS AND PROVIDING THE DEPARTMENT WITH SUFFICIENT RESOURCES TO ACCOMPLISH SUCH TASKS. S 2. This act shall take effect immediately.

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