New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The office of General Counsel issued the following informal opinion on April 3, 2000, representing the position of the New York State Insurance Department.

Subsidy of premium under group health insurance plan

Question Presented:

Does the term "benefits" as used in N.Y. Comp. Codes R. & Regs. tit. 11 Section 52.18(c)(2), (Regulation 62) include the right of a member of a group insurance plan to receive, from the group policyholder, a permanent subsidy of his/her health insurance premium?

Conclusion:

No. The continuation of the group policyholder's subsidy of a group member's health insurance premium is not addressed in the Insurance Law. The term "benefit" as used in the above regulation refers to a claim for health care benefits provided under the health insurance policy.

Facts:

Pursuant to the group health insurance contract, from 1985 until approximately 1992, insurance agents for an Insurance Company ("The Company") were able to qualify to receive subsidized health insurance coverage from The Company. First, certain agents were able to qualify for a subsidy on an annual basis if they met certain production criteria specified in their health insurance contract. Second, the contract specified three ways in which agents could earn a permanent qualification for subsidized health insurance coverage. Once an agent qualified for a permanent subsidy, The Company would "continue contributing to [agents] health coverage without reference to annual production requirements."

It appears that in 1991 or 1992, The Company discontinued its policy of subsidizing health insurance coverage for its agents. Thus, if the agents, even those who had qualified for a permanent subsidy, wished to continue receiving the health insurance coverage they would have to pay the full premium for such coverage.

The Company has taken the position that, pursuant to the contract, it maintained the right, "to change or terminate the group benefit program or a particular plan at any time."

A class action suit has been brought on behalf of the agents who lost their rights to subsidized coverage. This action is currently pending in a District Court.

Analysis:

N.Y. Comp. Codes R. & Regs. tit. 11 Section 52.18(c)(2) states:

(c) Renewal and cancellation. (1) Notices of nonrenewal or termination shall provide for at least 30 days prior notice except where otherwise specifically prescribed by statute. Any other conditions for nonrenewal or termination shall be fully set forth in the policy.

(2) No termination of coverage shall prejudice the right to a claim for benefits which arose prior to such termination.

The term "benefit" as used in N.Y. Comp. Codes R. & Regs. tit. 11 Section 52.18(c)(2) cannot be viewed in a vacuum. The Regulation uses the term "claim for benefits". This refers to a claim for the health care benefits which were available to the insured prior to the termination of the policy. For example, if an insured was treated on April 1st for a condition covered under the health insurance policy and the policy was terminated on April 2nd, the insurer would still be responsible for a claim for the April 1st treatment even if that claim was submitted to the insurer on April 3rd. The question of whether an insurance agent has the right to a continued subsidy of his or her health care premium is not addressed by this Regulation or by any other portion of the New York Insurance Law or Regulations.

For further information you may contact Associate Attorney Rochelle Katz at the New York City Office.