OGC Opinion No. 08-09-11
The Office of General Counsel issued the following opinion on September 24, 2008, representing the position of the New York State Insurance Department.
RE: Continuation of Health Insurance Coverage for Employees Having Other Coverage in Effect Prior to Termination
Question Presented:
Under New York’s continuing coverage laws, may an employee elect to continue a former employer’s group coverage if the employee is eligible for Medicare prior to the time the employee makes the election for continuation of group coverage?
Conclusion:
Yes. The New York Legislature amended New York’s continuing coverage law to be consistent with federal law, Consolidated Omnibus Budget Reconciliation Act (COBRA), 29 U.S.C. §§1161, et. seq.,(LexisNexis 2008), as interpreted by the United States Supreme Court in Geissal v. Moore, 524 U.S. 74 (1998). In Geissal, the Court held that federal COBRA laws do not allow an employer to deny COBRA continuation coverage to an otherwise qualified employee who is covered under another group health plan at the time that the employee makes the COBRA election.
Facts:
The inquirer reports that he is one of two employees over the age of 65 at a firm that has less than 20 employees. He further reports that both employees are entitled to benefits under Medicare Part A & B. The inquirer indicates that he is aware that federal COBRA rules are only applicable to employees in firms with 20 or more employees, and that New York’s continuing coverage laws apply to firms with fewer than 20 employees. He asks whether under New York law, an employee may elect to continue a former employee’s group coverage when the employee is eligible for Medicare prior to the time that the employee makes an election for continuation of group coverage.
Analysis:
Continuation requirements under federal COBRA laws and the laws of New York require employers, and other group insurance providers, to continue to provide insurance coverage to covered individuals following the occurrence of a “qualifying event.” See Office of General Counsel (“OGC”) Opinion 07-09-05 (Sept. 6, 2007). Employers are subject to either COBRA or requirements of continuation of coverage under New York law. OGC Opinion 07-09-05, September 6, 2007; OGC Opinion 08-04-32, April 23, 2008.
The federal requirement for continuation coverage is limited to businesses with over 20 employees. 29 U.S.C.§1161(b) (LexisNexis 2008). Thus, any requirement for continuation coverage in the factual pattern presented by the instant inquiry would be governed by the New York Insurance Law (McKinney 2008). See OGC Opinion No. 05-06-04, June 3, 2005.
The inquiry does not indicate whether the company’s group health insurance coverage is offered by a commercial insurer, a health maintenance organization (HMO), or a non-profit health insurer. However, the continuation of coverage provisions for each of these insurers are similar. Article 32 of the Insurance Law applies to commercial health insurers, and Article 43 governs non-profit health insurers and HMOs. Group health policies that fall under the purview of Articles 32 or 43 of the Insurance Law must provide continuing insurance coverage following a “qualifying event,” such as the termination of employment or membership in a group health policy. To be eligible for continuing insurance, a beneficiary must be enrolled in a group health plan prior to the occurrence of a qualifying event. OGC Opinion No. 08-04-32, April 23, 2008.
New York Insurance Law § 3221(m) sets forth the continuation requirements for group contracts issued by commercial insurers. That statute reads in pertinent part as follows:
(m) A group policy providing hospital, surgical or medical expense insurance for other than accident only shall provide that if all or any portion of the insurance on an employee or member insured under the policy ceases because of termination of employment or membership in the class or classes eligible for coverage under the policy, such employee or member shall be entitled without evidence of insurability upon application to continue his hospital, surgical or medical expense insurance for himself or herself and his or her eligible dependents, subject to all of the group policy’s terms and conditions applicable to those forms of benefits and to the following conditions:
(1) Continuation shall cease on the date which the employee, member or dependent [sic] first becomes, after the date of election: (A) entitled to coverage under title XVIII of the United States Social Security Act (Medicare)….; or (B) 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 policy conversion option of this section shall not be considered as such an arrangement under which an employee, member or dependent could become covered. (Emphasis supplied)
Insurance Law §4305(e), which is applicable to continuation requirements for group contracts issued by not-for-profit health insurers and HMOs, sets forth a similar requirement.
Prior to 2001, under the New York Insurance Law, continuation benefits were unavailable to an employee who was covered under another employer sponsored health insurance plan or entitled to Medicare benefits prior to the time of making an election for continuation of coverage. In 2001, however, the New York State Legislature enacted chapter 391 to bring New York law into conformance with federal COBRA law as interpreted by the U.S. Supreme Court in Geissal v. Moore Medical Corporation, 524 U.S. 74. In that decision, the Court stated:
[W]hat is crucial is that [the federal COBRA law] does not speak in terms of coverage that might exist or continue; it speaks in terms of an event, the event of becom[ing] covered. This event is significant only if it occurs, and first occurs, at a time after the date of the election. It was undisputed that both before and after James Geissal elected COBRA continuation coverage he was continuously a beneficiary of TWA’s group health plan. Because he was thus covered before he made his COBRA election, and so did not “first become” covered under the TWA plan after the date of election, Moore could not cut off his COBRA coverage under the plain meaning of the [federal statute]. 524 U.S. at 82.
In sum, where an employee’s entitlement to Medicare benefits arise prior to the qualifying event of termination from employment (which in in the inquirer’s case, is his retirement), under New York law, the employee may elect, at retirement, to continue to receive the former employer’s group health insurance coverage.
Both §§ 3221(m) and 4305(e) clearly state that discontinuation of group coverage for a former employee who becomes entitled to Medicare benefits or covered by another health plan occurs only if that employee becomes entitled to Medicare benefits or coverage under another health plan after the date of election.
For further information you may contact Senior Attorney Susan S. Htoo at the Albany Office.