Healthy New York Makes Health Coverage More Affordable for Small Businesses

For small businesses in New York State, a state-sponsored program known as "Healthy New York" offers reduced cost coverage through HMOs, potentially making health care coverage an affordable business proposition for a company.

Healthy New York was created through health care reform legislation enacted in New York in 2000, and became available in 2001. The program mandates all HMOs operating in the state to offer standardized, streamlined health insurance packages.

Premium costs are kept low through a stop-loss feature financed by the state. Essentially, the state acts as reinsurer for 90 percent of the claims paid between $5,000 and $75,000 for a member in a calendar year. This stop-loss feature originally was applied to annual claims between $30,000 and $100,000, but was lowered to the current amount in 2003. According to a profile of Healthy New York in State Coverage Initiatives, a service of the Robert Wood Johnson Foundation, this change was due to lower than expected claims activity, and resulted in most plans in the program reducing their premiums by approximately 17 percent. Premiums are community-rated, with coverage categories for one adult, two adults, one parent with child(ren), and family.

As noted above, Healthy New York plans can be characterized as streamlined coverage, which also contributes to premium savings. Coverage includes inpatient and outpatient hospital services; physician services; maternity care; preventive care; laboratory, diagnostic, and x-ray services; and emergency services. Prescription drug coverage is available as an optional benefit. According to the profile in State Coverage Initiatives, premiums for Healthy New York plans without prescription drug coverage average about 12 percent less than premiums for plans with the coverage.

Coverage is not provided for home health care, chiropractic care, physical therapy, hospice care, and mental health/substance abuse treatment. Because coverage is through HMOs, benefits are available only through network providers (except in cases of an emergency or when necessary care is not available through a network provider). Copayments or deductibles apply to most services.

A small business located in New York can offer Healthy New York if it has no more than 50 employees, and at least 30% of its employees earn $33,000 (indexed) or less annually in wages. Furthermore, in order to be eligible to offer the coverage, the business must not have provided health insurance to its employees in the last 12 months. An employer will be considered to have provided coverage only if it both arranged for coverage and contributed at least $50 per employee per month ($75 monthly in some counties) to the coverage.

Businesses that offer the coverage must contribute at least half of the employee premium (but need not contribute to the premium cost for dependents). Coverage must be offered to all employees who work at least 20 hours a week and who earn $33,000 or less. At least half of the employee group must enroll in the plan, and at least one of the enrolled employees must earn no more than $33,000.

Small businesses must certify on an annual basis that they continue to meet the eligibility requirements for offering Healthy New York.

Coverage under the Healthy New York program also is available to certain sole proprietorships (defined as the sole owner and employee of a business) and to certain uninsured employed individuals.

According to the profile in State Coverage Initiatives, since its inception, Healthy New York has enrolled more than 123,000 workers. As of December 2004, active enrollment stood at more than 76,000. Approximately 20 percent of enrollees are individuals who obtain the coverage through their small business employer, 20 percent are sole proprietors, and 60 percent are working individuals.

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