NY Gov. Signs Ian’s Law to Limit Health Insurers’ Ability to Drop Patients

New York Governor, David Paterson, recently signed a new law that will improve health insurance protections for patients. According to the signed legislation, also known as “Ian’s Law,” health insurance companies will not be able to suddenly drop a patient or cut their benefits without following specific guidelines.

The Inspiration Behind Ian’s Law

Ian’s Law is named after Ian Pearl, a 37-year-old man suffering from muscular dystrophy, whose health insurance coverage was terminated without an option for replacement coverage that would cover his treatments. While his treatments were intense (24-hour nursing care) and expensive, his family felt that the sudden termination of coverage was unlawful, resulting in a lawsuit against his insurer, Guardian Life Insurance Company of America.

Initially, the lawsuit upheld his coverage discontinuance. However, a separate lawsuit revealed company documents showing the insured had compiled a list of its costliest members (calling them names like “dogs” and “train wrecks”) and planned to get rid of them.

How “Ian’s Law” Will Protect Patients

After realizing that the company had bad intentions for high-cost policyholders, the governor decided to take action. On Thursday, he signed the new law that would protect patients in the following ways:

  • Insurers must notify of discontinuation: The new legislation amends the states current law by requiring insurance companies to give written notice of pending discontinuation at least 90 days prior to the date of discontinuation of coverage.
  • Insurers must offer alternatives: If a policyholder’s plan will be discontinued, the insurer must provide that policyholder with options to purchase alternative, replacement health insurance that is already offered by the insurer.
  • Policyholders can’t be dropped due to high costs: The law also mandates that a policyholder cannot be dropped from a group plan just because the individual is high-cost.

In addition, policyholders with serious medical conditions who have had related insurance benefits in the 12-month period preceding the discontinuation will be able to keep their present coverage if similar coverage cannot be made available.

The law benefits policyholders because it holds the insurance industry accountable for the coverage it provides. In addition to protections offered by health care reform, this law should protect individuals from being dropped who have played by the rules with their insurance companies.