Paterson signs Ian’s Law, limiting HMO contract discontinuations

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New York Gov. David A. Paterson signed “Ian’s Law” into law,  expanding the protections for consumers in case a health insurer or HMO discontinues a class of policies or contracts.

David Paterson

The law takes effect Jan. 1, 2011, and requires written notice to all members at least 90 days before the date of discontinuation. The law also requires to give “sufficient notice” to policyholders of options for replacement and alternative coverage provided by the insurer.

The law also prohibits terminating a group plan specifically to drop an individual high-cost policyholder from the plan.

“With this legislation, New York consumers have one more weapon in their arsenal of legal defenses against unscrupulous insurance practices,” Paterson said in a statement. “Inspired by Ian’s courageous fight, this law fortifies consumer protections in the event a health insurer terminates coverage without offering a replacement. Namely, this law will prevent insurance companies from discontinuing an entire class of policies as a pretext to avoid paying one person’s medical claims.”

Bill S.6263-C/A.9243-B, known as “Ian’s Law,” also establishes a review process for the state insurance superintendent to ensure that policyholders with serious medical conditions who have utilized related insurance benefits in the 12-month period preceding the discontinuation of their group plan keep their present coverage if similar coverage is not made available in the insurer’s replacement plan. It will not affect state finances.

“The practice of terminating an insurance policy line as a pretext to dropping coverage for individuals who need it most is not only unconscionable – it’s a matter of life and death,” said New York state Sen. Eric Schneiderman in a statement. “Ian’s Law holds the insurance industry accountable and protects patients like Ian – and other families who have played by the rules – from being thrown off when they get sick. This is a major breakthrough for patients’ rights.”

Assemblyman Daniel O’Donnell said Ian’s Law protects “individuals from the abuses of insurance companies. Contrived money-making schemes must not dictate who receives medical coverage.”

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