The Office of General Counsel issued the following opinion on July 7, 2005, representing the position of the New York State Insurance Department.
Re: Group Health Insurance Coverage of Spouse
Issue
May an individual legally keep his or her spouse on a group health insurance policy, even if they are separated?
Conclusion
There is nothing in the New York Insurance Law (McKinney 2000 and 2005 Supplement) or the Regulations promulgated there under that would prevent continuation of such coverage. However, an employer remains free under the New York Insurance Law to limit dependent coverage to spouses who are not separated. In addition, under New York law, the separated spouse, both upon separation and upon any subsequent divorce, would have a right to continue such coverage through a conversion policy on his or her own.
The Employee Retirement Income Security Act (ERISA)(, 29 U.S.C.A. § 1001 et seq. (West 1999 and 2003 Supplement) preempts state laws governing employee welfare benefit plans. Where the employer has more than 20 employees, ERISA requires continuation of coverage for separated spouses.
Facts
Since this was a general question, no facts were furnished.
Analysis
This opinion is limited to the requirements imposed by the New York Insurance Law (McKinney 2000 and 2005 Supplement) and applicable Federal statutes and does not consider any requirements that may be imposed by the New York Domestic Relations Law (McKinney 1999 and 2005 Supplement) or other comparable statute.
New York Insurance Law § 4235(c)(1)(A) (McKinney 2000 and 2005 Supplement), dealing with group health insurance, authorizes issuance of:
A policy issued to an employer or to a trustee or trustees of a fund established by an employer, which employer or trustee or trustees shall be deemed the policyholder, insuring with or without evidence of insurability satisfactory to the insurer, employees of such employer, and insuring, except as hereinafter provided, all of such employees or all of any class or classes thereof determined by conditions pertaining to . . . the family status of the employee . . . for insurance coverage on each person insured based upon some plan which will preclude individual selection. . . . The premium for the policy shall be paid by the policyholder, either from the employer's funds, or from funds contributed by the insured employees, or from funds contributed jointly by the employer and employees. If all or part of the premium is to be derived from funds contributed by the insured employees, then such policy must insure not less than fifty percent of such eligible employees or, if less, fifty or more of such employees
New York Insurance Law § 4235(c)(1) also lists various employer based associations that may purchase group health insurance.
New York Insurance Law § 4235(f)(1), dealing with policies of commercial health insurers, provides:
Any policy of . . . group accident and health insurance may include provisions for the payment by the insurer of benefits for expenses
incurred . . . for the employee or other member of the insured group, his spouse, his child or children, or other persons chiefly dependent upon him for support and maintenance . . . .
New York Insurance Law § 4305(c)(1) (McKinney 2000 and 2005 Supplement), dealing with contracts of not-for-profit health insurers and all Health Maintenance Organizations, has a similar provision.
There is nothing in the New York Insurance Law that would prevent an individual from keeping his or her separated spouse on a group health insurance policy. However, the New York Insurance Law does not mandate what coverage an employer may opt to provide in such a situation. Accordingly, in accordance with New York Insurance Law § 4235(c)(1)(A) the employer could consider the family status of the employee in providing benefits. The employee/insured should consult his/her certificate of coverage or member handbook for the definition of "eligible spouse" to ascertain who is eligible for coverage.
However, the provision of health benefits by an employer constitutes an employee welfare benefit plan as defined in ERISA. ERISA preempts state laws affecting employee welfare benefit plans. ERISA, 29 U.S.C.A. § 1161 (West 1999), has a continuation requirement affecting employers of more than 20 which requires continuation of health insurance coverage upon the happening of a qualifying event. A qualifying event is defined, 29 U.S.C.A. § 1163 (West 1999):
For purposes of this part, the term 'qualifying event' means, with respect to any covered employee, any of the following events which, but for the continuation coverage required under this part, would result in the loss of coverage of a qualified beneficiary: . . . (3) The divorce or legal separation of the covered employee from the employee's spouse.
With respect to those employers not covered by the ERISA continuation requirement, New York Insurance Law § 3221(m) (McKinney 2000 and 2005 Supplement), dealing with policies of commercial insurers, requires continuation of coverage when an otherwise covered dependent is separated or divorced. New York Insurance Law § 4305(e) imposes a similar requirement with respect to contracts of not-for-profit insurers and HMOs.
New York Insurance Law §§ 3221(m) and 4305(c), by their terms, only impose a requirement on the insurer. Since ERISA will not permit a state to mandate coverage of an employee welfare benefit plan, New York Insurance Law § 3221(m) or 4305(e) may not be construed to require an employer with less than 20 employees to provide any coverage to a spouse upon separation.
In accordance with New York Insurance Law §§ 3221(e)(1) and 4304(d)(1), when any applicable continuation period expires, the spouse or former spouse has a right to convert to an individual policy or contract.
For further information one may contact Principal Attorney Alan Rachlin at the New York City Office.