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PW_B130040
New York State Budget Impact on Your Health Care Plan Premiums
You may have read or heard in the news about additional “fees and assessments” that have been incorporated into the New York State budget, but what you may not realize is the direct impact those fees and assessments have on health insurance premiums. Health care premiums will increase as a direct result of the State Legislature approving the Governor’s proposed increases in taxes, fees and assessments on your health benefits on February 4, as part of his Deficit Reduction Plan. This increase is in addition to any annual increase you may receive. And, additional proposed increases are possible in the coming months.
You can read a letter from Empire President and CEO, Mark Wagar here.
MAKE YOUR VOICE HEARD! Let your state legislators know what you think.
For 75 years, Empire has prided itself on unmatched customer service and support, partnering with our large network of providers, physicians and specialists to manage health care cost trends as over the long term. We remain committed to offering cost-effective health plans while providing members with tools to improve their overall health and better manage chronic conditions so that they may live healthier, longer and productive lives.
Did you know that you pay tax on your health benefits?
This information may come as a surprise to many New Yorkers who had no idea that health benefits are taxed in the first place – yet alone the magnitude of these taxes.
If all current proposals are enacted, state taxes, fees and assessments on health benefits will total over $4 billion dollars a year. This amount rivals what is collected through the state’s largest business tax (the State Franchise Tax), represents the largest single tax on jobs and employment in the state of New York, and is far more than taxes on health benefits levied by any other state.
If the entire proposal is enacted, including potential increases being voted on in April, some will be paying up to 10 percent of their premium dollars to taxes, fees and assessments to the State.
Will these new taxes solve the current economic problems?
We are in unprecedented economic stress across the country, which is particularly acute for all of us in New York, and for our state government as it works to balance our budget. Empire is committed to working closely with business, community and government leaders to help New York through this difficult time in any way we can.
However, we are very concerned that over the years, the legislators’ ability to tax your health benefits to fill budget holes has become a habit – rather then actually addressing underlying drivers of increasing health care costs.
The fact is, we believe that at this point in our economy the additional taxes, fees and assessments on health benefits will only force more New York companies to drop coverage altogether. The result not only leaves more consumers struggling with health care coverage, but also diminishes New York as an attractive environment for businesses that could bring essential new jobs to support our communities when an economic recovery emerges.
What does this mean for your health coverage?
Unfortunately, misinformation has replaced the facts about what really drives increases in health care premiums and what insurance companies do with your money. But the facts are:
 | New York State insurance law requires that at least 75-80% of every premium dollar is spent on your actual health care costs. Empire routinely exceeds these minimum “loss ratios” – spending more of your premium dollars on health care and less on administration and surplus than almost every other health insurer in New York, whether the organization is for-profit or not-for-profit. And Empire is proud to continue offering members the broadest hospital and doctor network access and a keen focus on caring customer service. |
| In addition, the health insurance business is one of the few New York industries actually required to generate a surplus, or profit, in order to maintain the critical reserve funds that are the basis of health insurance – making sure providers and physicians are paid for services rendered. |
| The surplus reserves required by the state and other national supervisory bodies cover current medical claims for services rendered that have not yet been processed for payment. They are also for unexpected spikes in health care costs from natural disasters due to weather, pandemic illness (such as flu outbreak) or man-made events such as the terrorist events on 9/11. Though Empire lost its headquarters and 13 of our associates located in the World Trade Center that day, these reserves allowed us to advance millions of dollars to hospitals and providers while New York recovered its infrastructure. They allow us to cover you, your families and our large business and labor customers during major health crises and insure that our hospitals and physicians receive payment. This is really what insurance is for and what we believe you should expect from your carrier. |
Using reserve funds for taxes, fees, and any other non-health care purpose, or to artificially lower rates when the cost of care under coverage is actually higher, is not permitted. Doing so would endanger the long-term financial stability necessary for the health insurance industry to provide you with the coverage when you need it most.
What can we do about this?
This is a challenging time. And all of us as New Yorkers are facing enormous challenges financially, professionally and personally. This increase in taxes on your health benefits should concern you. We are asking you to consider the mandated nature of these increases, both already enacted, and those pending. Be thoughtful as you discuss the long-term impact of these taxes, fees and assessments on you and your local businesses, union benefits, colleagues and neighbors. Educate yourself about your families’ health care needs and where your premium dollars really go. Then, speak up to your legislators.
You can find out about your state representatives at sites such as
For our part, Empire will continue working with you, and for you, just as we have for the past 75 years. We helped create many of the features that distinguish New York health coverage, such as that no one can be denied coverage because of an existing condition and that costs are kept level by “pooling” small companies and individuals with thousands of others. Our goal is to continue offering the best combination of coverage, access to more hospitals and doctors, responsive customer service and new health care coverage options that fit your particular budget.
We want your help and input to help make health care changes that create healthier, productive communities – something increasing taxes won’t do.
You can use this template to let your state legislator know your opinion on these fees.
To find information on your specific State legislators, go to:
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