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 July 24, 2001, representing the position of the New York State Insurance Department.

Re: Group Health Insurance for Directors of Limited Liability Company

Question Presented:

Are directors of a limited liability company considered employees making them eligible for group health insurance under the Insurance Law?

Conclusion:

Yes. Pursuant to N. Y. Ins. Law § 4235(d)(1) (McKinney 2000) employees "may also include the directors of the employer" making directors eligible to be insured under a group health policy.

Facts:

The question is general in nature.

Analysis:

N. Y. Ins. Law § 4235(c)(1)(A) (McKinney 2000) prescribes those permissible groups to which group accident, group health or group accident and health insurance policies may be delivered or issued for delivery in New York State. That section states in relevant part:

(c)(1) No policy of group accident, group health or group accident and health insurance shall be delivered or issued for delivery in this state unless it conforms to one of the following descriptions:

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 employment or a combination of such conditions and 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. However, such a plan may permit a limited number of selections by employees if the selections offered utilize consistent plans of coverage for individual group members so that the resulting plans of coverage are reasonable. 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.

Further, N. Y. Ins. Law § 4235(d)(1) (McKinney 2000) provides:

(d)(1) In this section, for the purpose of insurance hereunder: "employees" includes the officers, managers, employees and retired employees of the employer and of subsidiary or affiliated corporations of a corporate employer, and the individual proprietors, partners, employees and retired employees of affiliated individuals and firms controlled by the insured employer through stock ownership, contract or otherwise; "employees" may be deemed to include the individual proprietor or partners if the employer is an individual proprietor or a partnership; and "employees" as used in subparagraph (A) of paragraph one of subsection (c) hereof may also include the directors of the employer and of subsidiary or affiliated corporations of a corporate employer. (emphasis added).

Directors of an employer, as in the case of a limited liability company, are eligible to be insured under a group health policy by virtue of the fact that they are deemed to be "employees of such employer".

For further information you may contact Attorney D. Monica Marsh at the New York City Office.