BILL NUMBER: S4719A
SPONSOR: FAHY
 
TITLE OF BILL:
An act authorizing municipalities to join a county self-funded or self-
insured health plan
 
PURPOSE:
Self-insurance, or self-funding, for health insurance is significantly
less expensive than contracting with private health insurers but
requires a sufficient number of employees to be economically feasible.
Accordingly, at least 24 counties currently self-insure. On the other
hand, most municipalities, including many smaller school districts, lack
sufficient employees to self-insure. This bill allows them to do so by
joining county self-insurance plans, provided both the County and the
municipality consent and specific financial requirements are met.
 
SUMMARY OF PROVISIONS:
Section 1. Establishes who can join a self-insured plan
Section 2. Provides how the plan will be certified
Section 3. Goes into effect immediately
 
JUSTIFICATION:
The New York State Association of Counties, the New York Association of
Towns, the New York Council of Mayors, and Albany and Schenectady coun-
ties support the bill. Requests for reform have increased following
discussions that resulted from the Governor's municipal consolidation
initiative.
Health insurers are already preparing for the inevitability of self-in-
surance plans by establishing departments to support them. The role of
the private insurer is reduced: it no longer handles plan funds or
profits from them, but it is still needed for claims processing and is
permitted to charge fees for that.
The revised bill was developed after discussion with the Department of
Financial. Services (DFS) and self-insurance consultants who serve muni-
cipalities and counties. DFS does not regulate self-insured plans.
Therefore, DFS favors the formation of municipal consortia pursuant to
Article 47 of the Insurance Law. However, Article 47 has deterred the
formation of municipal health insurance consortia due to the time and
cost involved in seeking DFS approval, to such an extent that only one
county self-insured plan has formed a consortium that incorporates
constituent municipalities.
This law allows municipalities to join county self-insured health plans
so long as certain criteria are met, criteria which DFS would typically
require in the formation of a consortium. Thus, the bill furthers a DFS
goal of enhancing the financial stability of county self-insured health
plans by ensuring that specific requirements are met before munici-
palities can admit additional municipalities into the plan, while at the
same time guaranteeing municipalities access to a self-insured plan
without having to create one from scratch. The financial requirements
outlined in this amended version of the legislation are based on infor-
mation from counties regarding what the Division of Financial Services
has historically required of municipal health insurance cooperatives.
Since self-insured health plans offer the greatest array of benefits at
the lowest cost, allowing municipalities to join them will benefit
taxpayers and municipal employees alike. Municipalities of various
kinds, including school districts, have publicly expressed concern that
rising health insurance costs are unsustainable under the tax cap. This
bill gives them one tool to keep health insurance costs under control.
 
LEGISLATIVE HISTORY:
2023/2024: A4412 Referred to Insurance
2021/2022: A543 Referred to Insurance
2019/2020: A310A Amended and referred to Insurance
2017/2018: A2578A Amended and referred to Insurance
2015/2016: A739 Referred to Insurance
2013/2014: A8362A Referred to Insurance
 
FISCAL IMPLICATIONS:
Only positive
 
EFFECTIVE DATE:
This act shall take effect immediately