Circular Letter No. 3 (2003)

February 19, 2003

STATUTORY REFERENCE:  Public Health Law Article 9-A, Insurance Law Section 1118

This letter is to advise all commercial insurers, Article 43 corporations and health maintenance organizations (HMOs) that in accordance with the Health Care Reform Act of 2000, the NYSHIPP program and its funding will end effective June 30, 2003. All NYSHIPP premium subsidies for the cost of group health insurance contracts purchased by eligible businesses will also end on that date.

NYSHIPP is a program designed to assist small businesses to purchase health insurance coverage for their employees and dependents through subsidization of the premium rate. A small business for the purpose of NYSHIPP is a sole proprietor or an employer of fifty or fewer employees. The program is administered by the New York State Department of Health. Insurance Department Circular Letter No. 18 (1996) provides a detailed description of the NYSHIPP program.

Please note that cessation of the NYSHIPP program does not automatically result in termination of the group health insurance contracts purchased by NYSHIPP businesses. Those contracts will continue in force so long as premium is paid, unless they are terminated by the policyholder or by the commercial insurer, Article 43 corporation or HMO for one of the contractually permitted bases.

The Department of Health has advised all the NYSHIPP participants of the termination of the program and has advised them of their conversion rights as well as their eligibility for the Healthy New York Program. The sole proprietors covered under the NYSHIPP program have been advised that after the program ends, they may no longer meet the definition of a group for insurance purposes. If the commercial insurer, Article 43 corporation or HMO decides to terminate a sole proprietor's coverage for failure to meet the definition of a group, the commercial insurer, Article 43 corporation or HMO is required to allow the sole proprietor to purchase an individual direct pay conversion contract. Additionally, all current NYSHIPP participants are automatically eligible to participate in the Healthy New York Program so long as they apply within 90 days of their final date of coverage in the NYSHIPP program.

The Department of Health has determined that the last date for insurers, Article 43 corporations and HMOs to submit outstanding bills for the premium subsidy to that Department is December 31, 2003.

Any questions regarding the termination of the NYSHIPP program may be directed to Rosemary DeSanta of the Department of Health at (518) 473-7883 or Janet Graham of this Department by telephone to (518) 486-7815 or by e-mail to [email protected]. All questions regarding billing and/or payment for the NYSHIPP subsidy should be directed to Francis Endryck of the Department of Health at (518) 474-5020.