NEW YORK PROHIBITS MANDATORY MAIL ORDER DRUG COVERAGE

INSIGHTS
On December 12, 2011, New York Governor Andrew Cuomo signed legislation that prohibits health insurers from requiring individuals to purchase prescription drugs from a mail-order pharmacy or to pay a copayment fee (additional charge) when these purchases are not made from the mail-order pharmacy, such as at a retail establishment that participates in the plan’s network. Similar legislation signed at the same time requires insurance coverage for prescription fertility drugs purchased at non-mail order pharmacies to be the same as if purchased through the mail. Both new laws become effective thirty days following enactment and apply to all policies and contracts issued, renewed, modified, altered or amended on or after the effective date.

The legislation does not impact self-insured plans or plans that have put the restriction in place as a result of a collectively bargained agreement.

IMPLICATIONS
Employers with New York group health insurance plans issued, renewed, modified, altered or amended on or after January 11, 2012 will no longer be able to require participants to fill prescriptions using the mail order facility, although the option may continue to apply.  Individuals must be guaranteed the choice of being able to fill a prescription through the mail or a network retail pharmacy with no additional copayment or fees.  

Plan sponsors will need to communicate these changes to plan participants and update any relevant plan documents.  For the most part, the new legislation will take effect for plans that renew on and after February 1, 2012.  The Federal Trade Commission (FTC) has noted that this legislation will result in higher prices for consumers, as the law will limit a health plan’s ability to steer the participants to a lower cost mail-order alternative.

ADDITIONAL INFORMATION

For specific questions concerning information contained in this INSIGHTS & IMPLICATIONS, please contact your Chernoff Diamond consultant. 

Information contained in this INSIGHTS & IMPLICATIONS is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulation. Chernoff Diamond provides comprehensive consulting and administrative services with respect to all forms of employee benefits, risk management, qualified and non-qualified retirement plans, private client services, and compensation and human resources. For additional information about our services, please contact us at 516.683.6100 or .(JavaScript must be enabled to view this email address) .