NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6280
SPONSOR: Weprin TITLE OF BILL:
An act to amend the insurance law, in relation to an extended free look
period for senior citizens purchasing individual health insurance poli-
cies or contracts
PURPOSE OR GENERAL IDEA OF BILL:
This bill would amend the Insurance Law to provide an extended "free
look" period for senior citizens purchasing individual health insurance
policies or contracts.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 of the bill divides Insurance Law § 3216(c) (10) into subpara-
graphs (A) and (B) and creates new subparagraphs (C) and (D). Subpara-
graph (A) maintains the existing 10 to 20-day free look period for
certain types of individual health insurance policies that insure an
individual who is under the age of 65 on the effective date of coverage.
Subparagraph (B) retains the current 30-day free look period fora policy
or certificate that is: (1) sold by mail order; (2) provides Medicare
Supplemental insurance for an insured who was under the age of 65 on the
effective date of coverage;,or (3) provides long-term care insurance for
an insured who is under the age of 65 on the effective date of coverage.
Subparagraph (C) inserts new language that requires a 90-day free look
period for a policy sold to an insured who is 65 years of age or older
on the. effective date of coverage. This new subparagraph also requires
the policy, or a notice attached thereto, to state that the insurer will
refund any premium paid (including any policy fees or, other charges)
upon surrender and written cancellation of the policy when a claim for
benefits has not been incurred. The policy, or a notice attached there-
to, must also state that in the event a claim for benefits has been
incurred during the time period from the effective date of coverage
until 90 days from the date the policy is delivered to,the policyholder,
the insurer will offset any amounts the insurer has paid on claims for
benefits under the policy against the refund of any premium paid
(including any policy fees or other charges). Subparagraph (D) maintains
the existing exclusion of single premium, nonrenewable insurance poli-
cies that insure against accidents or accidental bodily injuries from
Insurance Law § 3216(c) (10). Section 2 of the bill divides Insurance
Law 4306(h) into new para- graphs (1) and (2), and creates a new para-
graph (3). Paragraph (1) maintains the existing 10- to 20-day free look
period for certain types of insurance contracts that insure an individ-
ual who is under the age of 65 on the effective date of coverage. Para-
graph (2) retains the Current 30-day free look period for an insurance
contract that is: (1) sold by mail order; (2) provides Medicare supple-
mental insurance for an insured who is under the age of 65 as of the
effective date of coverage; or (3) provides long-term care insurance for
an insured who is under the age of 65 as of the effective date of cover-
age. Paragraph (3) creates a 90-day free look period for a contract sold
to an insured who is 65 years of age or older on the effective date .of
coverage. This new paragraph also requires the contract, or a notice
attached thereto, to state that the insurer will refund any premium paid
(including any contract fees or other charges) upon surrender and writ-
ten cancellation of the contract when a claim for benefits has not been
incurred. The contract, or a notice attached thereto, must also state
that in the event it claim for. benefits has been incurred during the
time period from the effective date of coverage until 90 days from the
date the contract is delivered to the policyholder, the insurer will
offset any amounts the insurer has paid on claims for benefits under the
contract against the refund of any premium paid (including any contract
fees or other charges.
Section 3 of the bill states that this bill would take effect 180 days
after it becomes law, and would apply to all individual insureds whose
effective dale of coverage is on or after the bill's effective date.
EXISTING LAW:
Currently, individual accident and health insurance policies or
contracts, written by commercial insurers, Article 43 non-profit medical
and dental indemnity and health and hospital service corporations, must
provide a 10- to 20-day free look period. Mail order coverage, Medicare
supplement insurance, and long-term care insurance must contain a 30-day
free look period. With regard to commercial insurers, individual, single
premium, nonrenewable policies insuring against accidents or accidental
bodily injuries do not need to contain a free look period.
LEGISLATIVE HISTORY:
A.10369 passed Assembly in 2008.
A8965 referred to insurance in 2010
01/12/11 referred to insurance
01/04/12 referred to insurance
STATEMENT IN SUPPORT:
In general, the "free look" period is a period of time after a policy
has been purchased in which the insured may pull out of the insurance
contract and obtain a refund. This bill extends the free look period to
90 days for individual accident and health insurance policies or
contracts that cover an insured who is 65 years of age or older on the
effective date of coverage.
A longer-free look period is necessary because insurers, agents, and
brokers may market certain individual health insurance policies as less
expensive alternatives to Medicare supplement insurance or long-term
care insurance. Senior citizens on fixed incomes are vulnerable to these
misleading marketing techniques, and they often do not realize that
these less expensive, limited benefit policies provide less coverage
than Medicare supplement insurance or long-term, care insurance.
Furthermore, there are a variety of Medicare supplement and long-term
care insurance plans that a senior citizen may choose from, all of which
contain varying benefits. Thus, senior citizens need more time upon
receipt of the policy or contract to evaluate whether the coverage they
purchased is.suitable for their needs.
Moreover, since Insurance Law § 3216( d)(2)(11) permits a commercial
insurer to cancel an individual insured within 90 days of issuing the
policy, a 90-day free look period for the insured seems appropriate.
Although a senior citizen could possibly manipulate a 90-day free look
period, the language set forth in the bill attempts to protect the
insurer from manipulation by requiring the insurer to offset any amounts
the insurer pays on claims beginning at the policy's effective date and
ending at the expiration of the 90-day free look period, against any
90-day free look period refund amounts. By requiring this offset
language to be stated in the insurance policy or contract, this bill
creates a deterrent to any possible manipulation.
BUDGET IMPLICATIONS:
This bill will not have an impact on state finances.
EFFECTIVE DATE:
This bill would take effect on the 180th day after it becomes law and
would apply to insureds whose effective date of coverage is on or after
such date.
STATE OF NEW YORK
________________________________________________________________________
6280
2023-2024 Regular Sessions
IN ASSEMBLY
April 3, 2023
___________
Introduced by M. of A. WEPRIN -- read once and referred to the Committee
on Insurance
AN ACT to amend the insurance law, in relation to an extended free look
period for senior citizens purchasing individual health insurance
policies or contracts
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 10 of subsection (c) of section 3216 of the
2 insurance law, as amended by section 31 of part B of chapter 58 of the
3 laws of 2004, is amended to read as follows:
4 (10) (A) There is prominently printed on the first page thereof or
5 there is attached thereto a notice to the effect that during a specified
6 period of time, which shall not be less than ten days nor more than
7 twenty days from the date the policy is delivered to the policyholder,
8 it may be surrendered to the insurer together with a written request for
9 cancellation of the policy and in such event the insurer will refund any
10 premium paid therefor including any policy fees or other charges[,
11 provided, however, that this paragraph shall not apply to single premium
12 nonrenewable policies insuring against accidents only or accidental
13 bodily injuries only; provided, however, that].
14 (B) Notwithstanding subparagraph (A) of this paragraph, a [contract]
15 policy or certificate sold by mail order [and]; a [contract] policy or
16 certificate providing medicare supplemental insurance covering any
17 insured under age sixty-five on the effective date of coverage; or a
18 policy or certificate providing long-term care insurance [must] covering
19 any insured under age sixty-five on the effective date of coverage shall
20 contain a provision, or shall have attached thereto a notice, permitting
21 the [contract] policy or certificate holder a thirty day period for such
22 surrender as described in subparagraph (A) of this paragraph.
23 (C) Notwithstanding subparagraph (A) of this paragraph, a policy sold
24 to any insured who is age sixty-five or older on the effective date of
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD09640-01-3
A. 6280 2
1 coverage shall have prominently printed on the first page thereof or
2 attached thereto a notice to the effect that, for a period of ninety
3 days from the date the policy is delivered to the policyholder, the
4 policy may be surrendered to the insurer together with a written request
5 for cancellation of the policy; and in such event, the insurer will
6 refund any premium paid therefor including any policy fees or other
7 charges provided that no claim for benefits has been incurred. The
8 notice shall also state that, in the event a claim for benefits has been
9 incurred under the policy within the time period from the effective date
10 of coverage until ninety days from the date the policy is delivered to
11 the policyholder, the insurer will refund any premium paid therefor
12 including any policy fees or other charges less any amounts the insurer
13 has paid on claims for benefits under the policy.
14 (D) This paragraph shall not apply to single premium nonrenewable
15 policies insuring against accidents only or accidental bodily injuries
16 only.
17 § 2. Subsection (h) of section 4306 of the insurance law, as amended
18 by section 32 of part B of chapter 58 of the laws of 2004, is amended to
19 read as follows:
20 (h) (1) a statement on the first page of the contract or in a notice
21 attached to the contract that during a specified period of time, which
22 shall not be less than ten days nor more than twenty days from the date
23 the contract is delivered to the individual, it may be surrendered to
24 the corporation together with a written request for cancellation of the
25 contract and that in such event the corporation will refund any premium
26 paid therefor including any contract fees or other charges; [provided,
27 however, that]
28 (2) notwithstanding paragraph one of this subsection, a contract sold
29 by mail order [and]; a contract providing medicare supplemental insur-
30 ance covering any individual under age sixty-five on the effective date
31 of coverage; or a contract providing long-term care insurance [must]
32 covering any individual under age sixty-five on the effective date of
33 coverage shall contain a provision, or shall have attached thereto a
34 notice, permitting the individual a thirty day period for such surrender
35 as described in paragraph one of this subsection;
36 (3) notwithstanding paragraph one of this subsection, a contract sold
37 to any insured who is age sixty-five or older on the effective date of
38 coverage shall have a statement on the first page of the contract or in
39 a notice attached to the contract that, for a period of ninety days from
40 the date the contract is delivered to the individual, the contract may
41 be surrendered to the corporation together with a written request for
42 cancellation of the contract, and that, in such event, the corporation
43 will refund any premium paid therefor including any contract fees or
44 other charges provided no claim for benefits has been incurred. The
45 statement or notice shall also state that, in the event a claim for
46 benefits has been incurred under the contract within the time period
47 from the effective date of coverage until ninety days from the date the
48 contract is delivered to the individual, the corporation will refund any
49 premium paid therefor including any contract fees or other charges less
50 any amounts the corporation has paid on claims for benefits under the
51 contract;
52 § 3. This act shall take effect on the one hundred eightieth day after
53 it shall have become a law and shall apply to all insured individuals
54 whose effective date of coverage is on or after the effective date of
55 this act.
