Skip to Content

The Office of General Counsel issued the following informal opinion on October 23, 2001, representing the position of the New York State Insurance Department.

Re: Health Claims Interest Rate

Question Presented:

What interest rate is an insurer required to pay for overdue accident and health insurance claims?


The interest rate an insurer is required to pay for overdue accident and health insurance claims is presently 12%.


No specific facts were provided.


New York Insurance Law §3224-a (McKinney 2000) provides, in pertinent part:

(c) Each claim or bill for health care services processed in violation of this section shall constitute a separate violation. In addition to the penalties provided in this chapter, any insurer or organization or corporation that fails to adhere to the standards contained in this section shall be obligated to pay to the health care provider or person submitting the claim, in full settlement of the claim or bill for health care services, the amount of the claim or health care payment plus interest on the amount of such claim or health care payment of the greater of the rate equal to the rate set by the commissioner of taxation and finance for corporate taxes pursuant to paragraph one of subsection (e) of section one thousand ninety-six of the tax law or twelve percent per annum, to be computed from the date the claim or health care payment was required to be made. When the amount of interest due on such a claims less than two dollars, an insurer or organization or corporation shall not be required to pay interest on such claim.

New York State Tax Law §1096 (McKinney 2000) provides as follows:

(e)(1) Authority to set interest rates. The commissioner of taxation and finance shall set the overpayment and underpayment rates of interest…(B) Underpayment rate. The underpayment rate set under this subsection shall be the sum of (i) the federal short-term rate as provided under paragraph three of this subsection, plus (ii) three percentage points. (3) Federal short-term rate. For purposes of this subsection: (A) The federal short-term rate for any month shall be the federal short-term rate determined by the United States secretary of the treasury during such month in accordance with subsection (d) of section twelve hundred seventy-four of the internal revenue code for use in connection with section six thousand six hundred twenty-one of the internal revenue code. Any such rate shall be rounded to the nearest full percent…

Pursuant to the above, the rate is the greater of 12% or the Federal short-term rate plus three percentage points. The October Federal short-term rate is 3.58% and when added to 3% equals 6.58%. Since 6.58% is less than 12%, the rate should be 12%.

For further information you may contact Senior Attorney Kay Raybar at the New York City Office.

Department of Financial Services


DFS Facebook page

Follow NYDFS on Twitter


Sign up online or download and mail in your application.