The Office of General Counsel issued the following opinion on June 23, 2005, representing the position of the New York State Insurance Department.
Re: Health Insurance Eligibility
May an individual who is only a part time resident of New York purchase a New York health insurance policy?
While the part time residence is not a determining factor and it would be permissible for an insurer or an Health Maintenance Organization to issue such a policy, under the facts as presented, an insurer could possibly opt to not issue a New York health insurance policy.
The inquirer's client is an individual who presently resides in New York with his wife and children. His present coverage through his employment, under which his dependent wife and children are covered, will soon cease because of termination of employment. While the client has secured new employment, that employment is outside the United States.
The client's wife is undergoing cancer treatment at a New York hospital and desires to continue such treatment in the same facility. Accordingly, when the client relocates to his new employment, his wife and children will not immediately join him. At some time in the future, the wife and children will relocate outside the United States to join the client, but will continue to maintain a residence in New York and split their time between the two locations.
The client's new employment will provide health coverage for himself and his dependents, but such coverage will not pay for treatments in the United States. The inquirer understands that any policy issued in New York may exclude coverage for treatment outside the United States. Accordingly, coverage for the dependents is desirable under the new coverage for the time spent outside the United States.
While the client may be entitled to continuation coverage in accordance with either a Federal statute, 29 U.S.C.A. § 1161 et seq. (West 1999 and 2005 Supplement), or a New York statute, New York Insurance Law §§ 3221(m) (McKinney 2000 and 2005 Supplement) or 4305(e) (McKinney 2000 and 2005 Supplement), he anticipates the expiration of such coverage and desires to purchase an individual New York health insurance policy for his dependents, especially his wife.
The Federal continuation coverage requirement is applicable to employers of 20 or more. Questions about that requirement should be addressed to:
Employee Benefit Security Administration
United States Department of Labor
33 Whitehall Street
New York, NY 10004
(212) 607-8681 (fax).
New York Insurance Law §§ 3221(m)(1), applicable to policies of commercial health insurers, requires continuation coverage under circumstances where Federal continuation coverage is not available and provides:
Continuation shall not be available for: . . . (B) an employee, member or dependent who is covered, becomes covered or could become covered as an employee, member or dependent by any other insured or uninsured arrangement which provides hospital, surgical or medical coverage for individuals in a group which does not contain any exclusion or limitation with respect to any pre-existing condition of such employee, member or dependent, except the group insurance or group remittance contract conversion option of this section shall not be considered as such an arrangement under which an employee, member or dependent could become covered.
Similar protection is provided pursuant to New York Insurance Law § 4305(e) for contracts of not-for-profit insurers and all Health Maintenance Organizations.
Since the fact that coverage is being provided under a continuation privilege is often not known to the insurer involved, because the premiums are still being forwarded by the employer, the insurer does not usually invoke the exception of New York Insurance Law § 3221(m)(1)(B). The employer, however, since additional administrative burdens may be imposed upon it, might, because of the availability of the foreign coverage, assert New York Insurance Law § 3221(m)(1)(B) as the basis for refusing to allow continuation.
It is the intention of New York Insurance Law §§ 3221(m)(1)(B) and 4305(e) to not require continuation of coverage where such coverage is duplicative of other coverages. If the policy to be continued contains the permissible exclusion for coverage while the insured is outside the United States, Canada or Mexico, there would not appear to be duplication. Further, if the new foreign coverage excludes preexisting conditions, that is another reason that there would not be duplication and the two coverages would be complementary.
Accordingly, there is no provision in the New York Insurance Law (McKinney 2000 and 2005 Supplement) or the Regulations promulgated thereunder that would prevent continuation coverage, where the two coverages are complementary and not duplicative.
New York Insurance Law § 3221(e), applicable to policies of commercial health insurers, requires conversion to an individual health insurance policy, which requirement becomes applicable after expiration of the continuation period. A similar requirement is imposed by New York Insurance Law § 4305(d) on contracts of not-for-profit health insurers and all HMOs.
New York Insurance Law §§ 3231(a) (McKinney 2000 and 2005 Supplement), dealing with policies of commercial insurers, and 4317(a) (McKinney 2000 and 2005 Supplement), dealing with contracts of not-for-profit insurers and HMOs, both enacted as part of a major reform of health insurance, provide:
No individual health insurance policy . . . providing hospital and/or medical benefits . . . shall be issued in this state unless such policy is community rated and, notwithstanding any other provisions of law, the underwriting of such policy involves no more than the imposition of a pre-existing condition limitation as permitted by this article. Any individual . . . must be accepted at all times throughout the year for any hospital and/or medical coverage offered by the insurer to individuals . . . in this state. Once accepted for coverage, an individual . . . cannot be terminated by the insurer due to claims experience. Termination of an individual . . . shall be based only on one or more of the reasons set forth in subsection (g) of section three thousand two hundred sixteen or subsection (p) of section three thousand two hundred twenty-one of this article. . . . For the purposes of this section, community rated means a rating methodology in which the premium for all persons covered by a policy or contract form is the same based on the experience of the entire pool of risks covered by that policy or contract form without regard to age, sex, health status or occupation.
In order to effectuate the statutory requirement, the Insurance Department promulgated N.Y. Comp. Codes R. & Regs. tit. 11, Part 360 (1998) (Regulation 145). That Regulation provides, N.Y. Comp. Codes R. & Regs. tit. 11, §§ 360.3(a) (1998) and 360.5(d) (1998):
No insurer may restrict or limit eligibility for individual . . . policies except in the following ways: . . . (5) Overinsurance rules filed with the Health and Life Policy Bureau and approved by the Superintendent subsequent to the adoption of this regulation for applicants actually covered under the same or other group or individual policies . . . .
N.Y. Comp. Codes R. & Regs. tit. 11, § 360.3(a)
Applicants for group or individual insurance may not be denied coverage based upon eligibility for coverage under another group or individual plan unless the applicant is actually covered by another plan. However, applicants for an individual health insurance policy may be denied coverage where the individual is eligible for comparable group coverage through an employer.
N.Y. Comp. Codes R. & Regs, tit. 11, § 360.5(d)
In addition, if there is coverage under both a new United States policy and the foreign policy under which the spouse and children are dependents, and such coverages are viewed as complementary, it is difficult to see how there would be overinsurance. However, because "comparable" is not defined in Regulation 145, an insurer might assert that there is "comparable" coverage and choose to deny issuance of an individual policy. Without specific facts as to the companies involved and their respective overinsurance rules, the terms of the policies and level of benefits, the Department is unable to opine further.
The full text of the quoted Regulations is available on the Department's website: www.ins.state.ny.us.
For further information please contact Principal Attorney Alan Rachlin at the New York City office.