May 21, 2012 NYSHIP Buyout Update
KEEPING YOU INFORMED…
On May 15, 2012, the New York State Department of Civil Service, Employee Benefits Division, issued another policy memorandum, effective immediately, regarding health insurance buyouts from the New York State Health Insurance Plan (“NYSHIP”). Their previous policy memorandum expressly prohibited NYSHIP-participating employers from allowing buyouts from a NYSHIP plan for employees who were enrolled in other NYSHIP coverage; e.g., through a spouse’s family NYSHIP plan, during the buyout period.
In our April 20, 2012 memorandum to you (attached), we stated our expectation that no immediate sanctions would be taken against employers with existing buyout programs which were inconsistent with the then new prohibition. As anticipated, the May 15, 2012 memorandum somewhat “changes the change” announced at that time and now permits existing “out of compliance” buyout programs to continue unchanged as follows:
1. Collectively negotiated buyout programs may continue until the “first day of the plan year following the ratification” of a new CBA.
2. Administratively established programs may continue until “the first day of the plan year following the end of the employer’s budget period that begins following” May 15, 2012. (As an example, the May 15, 2012 memorandum states that, “if the employer’s budget period runs from June 1 through May 31 of each year, this policy would take effect January 1, 2014.”)
What Employers Need to Do
No immediate action will be necessary in many cases. Employers should, however, review their existing buyout programs to determine whether revisions will be necessary at the conclusion of the stated “grandfathering” period. For collectively bargained programs, employers should, if necessary, seek to negotiate contract language ensuring compliance with the NYSHIP buyout policy.
As we previously recommended, employers may also look into the possibility of offering new or additional non-NYSHIP health insurance options. Employees enrolled in non-NYSHIP plans who participate in future buyouts will not be affected by the new NYSHIP policy.
If you have any questions regarding this latest NYSHIP change in direction, or methods of ensuring compliance with it, please do not hesitate to contact us.
THIS MEMORANDUM IS MEANT TO ASSIST IN GENERAL UNDERSTANDING OF CURRENT LAW AND POLICY. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. THOSE WITH PARTICULAR QUESTIONS SHOULD SEEK THE ADVICE OF COUNSEL.
© Lamb & Barnosky, LLP, 2012