Bill Text: NY A06305 | 2025-2026 | General Assembly | Introduced
Bill Title: Creates the health insurance guaranty fund to protect covered individuals against the failure or inability of a health insurer to perform its contractual obligations due to financial impairment or insolvency.
Spectrum: Partisan Bill (Democrat 21-0)
Status: (Introduced) 2025-03-03 - referred to insurance [A06305 Detail]
Download: New_York-2025-A06305-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 6305 2025-2026 Regular Sessions IN ASSEMBLY March 3, 2025 ___________ Introduced by M. of A. SIMONE, BENEDETTO, BRAUNSTEIN, COLTON, GONZALEZ- ROJAS, HEVESI, HUNTER, MAGNARELLI, OTIS, PAULIN, PEOPLES-STOKES, ROSENTHAL, SEAWRIGHT, STECK, STIRPE, WEPRIN -- Multi-Sponsored by -- M. of A. COOK, EPSTEIN, GLICK, LUPARDO, SIMON -- read once and referred to the Committee on Insurance AN ACT to amend the insurance law and the state finance law, in relation to creating the health insurance guaranty fund The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subsection (e) of section 7402 of the insurance law is 2 amended to read as follows: 3 (e) Is found, after examination, to be in such condition that its 4 further transaction of business will be hazardous to its policyholders, 5 creditors, or the public. This shall include a health insurer, as 6 defined in article eighty-one of this chapter, that is consistently 7 unable to meet the requirements of section three thousand two hundred 8 twenty-four-a of this chapter. 9 § 2. Section 7403 of the insurance law is amended by adding a new 10 subsection (e) to read as follows: 11 (e)(1) Upon a determination by the superintendent and the rehabilita- 12 tor that funds from the New York health insurance consumer protection 13 security fund are necessary to meet the requirements of article eighty- 14 one of this chapter, the superintendent shall make available such funds 15 as are necessary, pursuant to the requirements of such article. 16 (2) The superintendent shall advance such funds as may be necessary 17 pursuant to subsection (d) of section eight thousand one hundred four of 18 this chapter. The rehabilitator and the superintendent shall establish a 19 plan, if possible, for repayment of the advance, at a rate of interest 20 determined by the superintendent. 21 (3) Advances, pursuant to paragraph two of this subsection, shall, in 22 all respects except to rate of interest, be subject to the provisions of EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD03984-01-5A. 6305 2 1 section one thousand three hundred seven of this chapter, provided that 2 in the event that an insurer which has received an advance pursuant to 3 this subsection is subsequently the subject of an order of liquidation, 4 the claim of the fund for the advance and any accrued interest shall 5 have priority above claims of all nonsecured creditors, provided the 6 requirements of article eighty-one of this chapter have been met, and 7 shall be paid immediately to the fund or as soon as assets are available 8 therefor. 9 § 3. Paragraph 1 of subsection (f) of section 7405 of the insurance 10 law, as amended by chapter 33 of the laws of 2005, is amended to read as 11 follows: 12 (1) No later than one hundred eighty days after a final order of 13 liquidation with an adjudication of insolvency of an insurer by a court 14 of competent jurisdiction of this state, the liquidator may in his sole 15 discretion make application to the court for approval of a proposal to 16 disburse assets out of marshalled assets, from time to time as such 17 assets become available, to any fund established by article seventy-six 18 of this chapter, article six-A of the workers' compensation law [and], 19 any foreign entity performing a similar function, and any fund estab- 20 lished pursuant to article eighty-one of this chapter, provided that the 21 requirements of subsection (a) of section eight thousand one hundred 22 three of this chapter have been met, having obligations because of such 23 insolvency. If the liquidator determines that there are insufficient 24 assets to disburse, the application authorized by this subsection shall 25 be considered satisfied by a filing by the liquidator stating the 26 reasons for this determination. 27 § 4. The insurance law is amended by adding a new article 81 to read 28 as follows: 29 ARTICLE 81 30 HEALTH INSURANCE GUARANTY FUND 31 Section 8101. Purpose. 32 8102. Definitions. 33 8103. New York health insurance consumer protection security 34 fund. 35 8104. Powers of the superintendent. 36 § 8101. Purpose. The purpose of this article is to protect covered 37 individuals against the failure or inability of a health insurer to 38 perform its contractual obligations due to financial impairment or 39 insolvency. To provide this protection, the legislature hereby creates a 40 New York health insurance consumer protection security fund to serve as 41 a guaranty fund mechanism capable of insuring that the financial obli- 42 gations of health insurers to their enrollees and health care providers 43 are satisfied. 44 § 8102. Definitions. As used in this article: 45 (a) "Fund" means the New York health insurance consumer protection 46 security fund created by this article. 47 (b) "Health insurer" means any organization or entity providing 48 reimbursement for a covered expense under any individual, group or blan- 49 ket policy or contract covering the kinds of insurance described in item 50 (i) of paragraph three of subsection (a) of section one thousand one 51 hundred thirteen of this chapter and licensed under article thirty-two 52 or forty-two of this chapter, which is not a member of, or participant 53 in, or a subsidiary of a member of or participant in, the funds created 54 pursuant to articles seventy-five, seventy-six, and seventy-seven of 55 this chapter; a corporation organized under article forty-three of thisA. 6305 3 1 chapter; or an organization certified under article forty-four of the 2 public health law. 3 (c) "Contractual obligation" means any payment or reimbursement owed 4 by a health insurer for a covered benefit under a policy, contract, or 5 comprehensive health benefits plan. 6 (d) "Impaired health insurer" means a health insurer for whom the 7 superintendent has initiated a proceeding under the provisions of arti- 8 cle seventy-four of this chapter. 9 (e) "Commissioner" means the commissioner of taxation and finance. 10 § 8103. New York health insurance consumer protection security fund. 11 (a) Consistent with the provisions of subdivision one of section nine- 12 ty-eight-e of the state finance law, there is hereby established a New 13 York health insurance consumer protection security fund. Such fund shall 14 be used in the payment of unpaid contractual obligations, in whole or in 15 part, by an impaired health insurer, after application of any funds 16 available from a proceeding implemented pursuant to article seventy-four 17 of this chapter. 18 (b)(1) Payment into the fund by health insurers shall be made through 19 an assessment based on the premiums received by a health insurer for 20 business in this state for the most recent calendar year for which 21 premium information is available, excluding premiums received for indi- 22 viduals under title XIX of the social security act. The superintendent 23 shall establish assessment levels sufficient to fully pay all unpaid 24 claims of an impaired health insurer, pursuant to subsections (b), (c) 25 and (d) of section eight thousand one hundred four of this article, and 26 to repay any transfers made pursuant to subdivision five of section 27 seventy-two of the state finance law. 28 (2) The superintendent may exempt, abate or defer, in whole or in 29 part, the assessment of a health insurer if the superintendent deter- 30 mines that payment of the assessment would endanger the ability of the 31 health insurer to fulfill its contractual obligations or place the 32 health insurer in an unsafe or unsound financial condition. 33 (3) In the event an assessment against a health insurer is exempted, 34 abated or deferred, in whole or in part, the amount by which that 35 assessment is exempted, abated or deferred shall be assessed against 36 other health insurers in a manner consistent with this section. 37 (c) Repayment of health insurers when funds become available from a 38 proceeding pursuant to article seventy-four of this chapter shall be 39 proportionate to the contribution from each health insurer. 40 § 8104. Powers of the superintendent. (a) For any impaired health 41 insurer, the superintendent shall direct the commissioner to make 42 payments from the New York health insurance consumer protection security 43 fund to ensure that payments to health care providers, or indemnity 44 payments to covered individuals, are made in full for services provided 45 that would not otherwise be fully reimbursed despite the proceedings 46 implemented pursuant to article seventy-four of this chapter. Services 47 provided either prior to the implementation of a proceeding under arti- 48 cle seventy-four of this chapter or after implementation of such 49 proceeding shall be eligible for reimbursement, in part or in whole, 50 from the fund. Payment in full shall be determined by the terms of the 51 health insurance contract, any contract between a health care provider 52 and the impaired health insurer and any applicable state or federal laws 53 or regulations including but not limited to part H of chapter sixty of 54 the laws of two thousand fourteen and section two thousand nineteen-a of 55 the Public Health Services Act, as amended by the Patient Protection and 56 affordable Care Act.A. 6305 4 1 (b) The superintendent shall direct the commissioner to make payments 2 to ensure that payment in full is made to health care providers, or 3 indemnity payments to covered individuals, for services provided before 4 the implementation of proceedings pursuant to article seventy-four of 5 this chapter within thirty days of the implementation of such proceed- 6 ing. 7 (c) The superintendent shall direct the commissioner to ensure that 8 payment in full is made to health care providers, or indemnity payments 9 to covered individuals, for services provided after the implementation 10 of proceedings pursuant to article seventy-four of this chapter within 11 thirty days of receipt of a claim. 12 (d) If necessary, the superintendent shall direct the commissioner to 13 advance monies from the fund to comply with the provisions of 14 subsections (b) and (c) of this section. 15 (e) The superintendent shall notify the director of the budget of the 16 need for monies to be transferred pursuant to subdivision five of 17 section seventy-two of the state finance law to meet the requirements of 18 subsections (b), (c) and (d) of this section. 19 (f) The superintendent shall direct the commissioner to use the monies 20 of the fund to repay any transfers made pursuant to subdivision five of 21 section seventy-two of the state finance law, when such funds are paid 22 pursuant to subsection (b) of section eight thousand one hundred three 23 of this article. 24 (g) The superintendent shall ensure that the cost of assessments 25 established pursuant to subdivision (b) of section eight thousand one 26 hundred three of this article are not included in premiums by any health 27 insurer. 28 § 5. Section 72 of the state finance law is amended by adding a new 29 subdivision 5 to read as follows: 30 5. Notwithstanding any provision of law to the contrary, upon notifi- 31 cation from the superintendent of financial services of the need for 32 monies to meet the requirements of subsections (b), (c) and (d) of 33 section eight thousand one hundred four of the insurance law, the direc- 34 tor of the budget shall transfer such funds as are necessary. 35 § 6. The state finance law is amended by adding a new section 98-e to 36 read as follows: 37 § 98-e. New York health insurance consumer protection security fund. 38 1. There is hereby established in the custody of the commissioner of the 39 department of taxation and finance an account of the miscellaneous 40 special revenue fund to be known as the New York health insurance 41 consumer protection security fund account. 42 2. Notwithstanding any other law, rule or regulation to the contrary, 43 the commissioner of taxation and finance is hereby authorized and 44 directed to receive for deposit to the credit of the New York health 45 insurance consumer protection security fund account, assessments imposed 46 pursuant to article eighty-one of the insurance law and transfers from 47 the general fund pursuant to subdivision five of section seventy-two of 48 this article. 49 3. The commissioner of taxation and finance shall make payments from 50 the monies on deposit in the New York health insurance consumer 51 protection security fund account in the amounts and at the times deter- 52 mined by the superintendent of insurance. 53 § 7. This act shall take effect immediately and shall be applicable to 54 any health insurer determined by the superintendent of financial 55 services, on or after such effective date, to be insolvent within the 56 meaning of section 1309 of the insurance law.
