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 November 7, 2001, representing the position of the New York State Insurance Department.

RE: New York State National Guard, Accident & Health Insurance Coverage.

Questions Presented:

1. Are the protections enumerated in Circular Letter 29 of 2001 available to members of the New York National Guard who have been activated by order of the Governor?

2. Does New York Military Law § 316 (McKinney 1990) allow an activated member of the New York National Guard to "continue" coverage without payment of premiums?

3. Do the protections of New York Military Law § 316 extend to group health insurance policies?

4. Do the protections of New York Military Law § 316 include family/dependent coverage?

Conclusions:

1. The protections enumerated in the Circular Letter are available to members of the New York National Guard who have been activated by order of the Governor.

2. While an insurer could not terminate the policy because of non-payment of premium, New York Military Law § 316 does not provide for "free" coverage for any period of time.

3. The protections of New York Military Law § 316 do not extend to group health insurance policies. Group accident & health insurance policies are, however, protected by New York Insurance Law §§ 3221 and 4305 (McKinney 2000).

4. Family/dependent coverage is encompassed within the protections of New York Military Law § 316.

Facts:

Since this is a general inquiry, no specific facts were supplied.

Analysis:

This Department issued Circular Letter 29 on September 22, 2001 to bring to the attention of insurers the protections afforded by the New York Insurance Law (McKinney 2000) to members of the armed forces reserves called to active duty.

The members of the New York National Guard about whom you inquire have been, or will be, activated by the Governor because of the events of September 11, 2001, in accordance with New York Military Law § 6(1) (McKinney 1990), which provides in pertinent part:

The governor shall have power, in case of . . . disaster . . . or imminent danger thereof, to order into the active service of the state for such period, to such extent and in such manner as he may deem necessary all or any part of the organized militia. Such power shall include the power to order the organized militia or any part thereof to function under the operational control of the United States army, navy or air force commander . . . .

New York Insurance Law § 3216(c) (13) & (14) (McKinney 2000), dealing with required policy provisions in individual accident & health insurance policies issued by commercial insurers, provide as follows, in pertinent part:

(13) Any persons covered by the policy who are also members of a reserve component of the armed forces of the United States, including the National Guard, shall be entitled, upon written request, to have their coverage suspended during a period of active duty as described herein. The policy shall provide that the insurer will refund any unearned premiums for the period of such suspension. Persons covered by the policy shall be entitled to resumption of coverage, upon written application and payment of the required premium within sixty days after the date of termination of the period of active duty . . . . Coverage shall be retroactive to the date of termination of the period of active duty. Such right of resumption provided for herein shall be in addition to other existing rights granted pursuant to state and federal laws and regulations and shall not be deemed to qualify or limit such rights in any way. No exclusion or waiting period may be imposed in connection with coverage of a health or physical condition of a person entitled to such right of resumption, or a health or physical condition of any other person who is covered by the policy unless: (A) the condition arose during the period of active duty and the condition has been determined by the secretary of veterans affairs to be a condition incurred in the line of duty; or (B) a waiting period was imposed and had not been completed prior to the period of suspension; in no event, however, shall the sum of the waiting periods imposed prior to and subsequent to the period of suspension exceed the length of the waiting period originally imposed.

(14) To be entitled to the right defined in paragraph thirteen of this subsection a person must be a member of a component of the armed forces of the United States, including the National Guard, who either: (A) voluntarily or involuntarily enters upon active duty (other than for the purpose of determining his or her physical fitness and other than for training), or (B) has his or her active duty voluntarily or involuntarily extended during a period when the president is authorized to order units of the ready reserve or members of a reserve component to active duty, provided that such additional active duty is at the request and for the convenience of the federal government, and (C) serves no more than four years of active duty.

New York Insurance Law § 4304 (i) & (j) (McKinney 2000), dealing with individual contracts issued by not-for-profit Health Service Corporations and all Health Maintenance Organizations, provides identical protections to individuals issued contracts by such insurers.

Generally, the protections afforded to active duty members of the military are set forth in the United States Soldiers and Sailors Civil Relief Act. 56 Stat. 775 (1942). The insurance protections of the Relief Act are set forth in 50 U.S.C.A. App. §540 (West 1990 and 2001 Supplement) et seq. Covered policies are defined in 50 U.S.C.A. App §540(a):

The term ‘policy’ shall include any contract of life insurance or policy on a life, endowment, or term plan, including any benefit in the nature of life insurance arising out of membership in any fraternal or beneficial association, which does not provide for the payment of any sum less than the face value thereof or for the payment of an additional amount as premiums if the insured engages in the military service of the United States . . . (1) which is in force on a premium-paying basis at the time of application for benefits hereunder, and (2) which was made and a premium paid thereon not less than 180 days before the date the insured entered into the military service. The provisions of this Act shall not be applicable to policies or contracts of life insurance issued under the War Risk Insurance Act, as amended, the World War Veterans Act, as amended, or the National Service Life Insurance Act of 1940, as amended.

The premiums on covered policies are guaranteed by the United States Department of Veterans Affairs, subject to an obligation of the service member to reimburse the government out of the death benefit, or otherwise. 50 U.S.C.A. App. §546 (West 1990 and 2001 Supplement).

Notwithstanding that "include" is generally construed not to exclude non-enumerated classes, American Anthracite & Bituminous Coal Corp. v. Leonardo Arrivabene, S.A., 280 F.2d 119 (2d Circ. 1960), it is clear from Congressional reports concerning both the original enactment, 1942 U.S. Code Cong. Service 1524-25, and a 1956 amendment extending the time the policy must have been in force to be covered from 30 to 180 days, 1956 U.S. Code Cong. and Admn News 3105-07, that Congress did not intend to protect other than the specified policies. Accordingly, if protection of other policies is to be provided, such protection must be provided by the states.

The New York State protection for individual accident & health insurance policies is provided by the above cited Insurance Law provisions and New York Military Law § 316(3) (McKinney 1990), which states:

No individual accident and health insurance policy, defined in paragraph three of subsection (a) of section one thousand one hundred thirteen of the insurance law, which policy insures a member of the organized militia of the state, and has not lapsed for the non-payment of premiums before the commencement of a period of active duty in the military service of the state of New York by such member, pursuant to an order of the governor issued under the authority of section six or seven of this chapter, shall lapse or be forfeited for the non-payment of premiums during a period of sixty days from the date that said member begins such active duty provided the insurer is furnished with written notice of said duty within thirty days after the commencement thereof. An insurer shall have the right to deduct the amount of due and unpaid premiums from any benefit that may become payable as a result of this subdivision.

New York Insurance Law § 3221 (n) & (o), dealing with group accident & health insurance policies issued by commercial insurers, provides as follows, in pertinent part:

(n) In addition to all the rights of conversion and continuation otherwise provided for herein, employees or members insured under the policy who are also members of a reserve component of the armed forces of the United States, including the National Guard, shall be entitled to have supplementary conversion and continuation rights in certain circumstances as follows:

(1) If the employee or member insured enters upon active duty as defined in subsection (o) of this section, and the employer or group policyholder does not voluntarily maintain coverage for such employee or member insured, the employee or member insured shall be entitled to have his or her coverage continued under the group policy in accordance with the conditions and limitations contained in paragraph seven of this subsection and have issued at the end of the period of continuation an individual conversion policy subject to the terms of this subsection. The effective date for the conversion policy shall be the day following the termination of insurance under the group policy, or if there is a continuation of coverage on the day following the end of the period of continuation.

(2) If the employer or group policyholder does not voluntarily maintain coverage for the employee or member insured during the period of active duty, and such employee or member insured does not elect the supplementary conversion and continuation rights provided for herein, coverage for such employee or member insured shall be suspended during the period of active duty.

(3) If the employee or member insured elects the supplementary continuation right provided for herein or coverage under the group plan is suspended, and such employee or member insured dies during the period of active duty, the conversion right provided by this section shall be available to the surviving spouse and children . . . . It shall also be available upon the divorce or annulment of the marriage of the employee or member insured, to the former spouse of such employee or member insured, if such divorce or annulment occurs during the period of active duty.

(4) If the employee or member insured elects the supplementary conversion and continuation right provided for herein or coverage under the group plan is suspended, and such employee or member insured is either reemployed or restored to participation in the group upon return to civilian status, he or she shall be entitled to resume participation in insurance offered by the group pursuant to this section . . . . The right of resumption provided for herein shall extend to coverage for the spouse and dependents of the employee or member insured and shall be in addition to other existing rights granted pursuant to state and federal laws and regulations and shall not be deemed to qualify or limit such rights in any way. No exclusion or waiting period may be imposed in connection with coverage of a health or physical condition of a person entitled to such right of resumption, or a health or physical condition of any other person who is covered by the policy unless: (A) the condition arose during the period of active duty and the condition has been determined by the secretary of veterans affairs to be a condition incurred in the line of duty; or (B) a waiting period was imposed and had not been completed prior to the period of suspension; in no event, however, shall the sum of the waiting periods imposed prior to and subsequent to the period of suspension exceed the length of the waiting period originally imposed.

(5) If the employee or member insured elects the supplementary conversion and continuation coverage provided for herein: (A) when such employee or member insured is either reemployed or restored to participation in the group, coverage under the supplementary rights provided for herein shall terminate on the date that coverage is effective due to resumption of participation in the group. (B) when such employee or member insured is not reemployed or restored to participation in the group upon return to civilian status, he or she shall be entitled to the conversion and continuation rights provided by subsections (e) and (m) of this section [general conversion and continuation rights]. . . .

(6) If coverage under the group plan is suspended during the period of active duty: (A) when the employee or member insured returns to participation in the group plan, coverage under the group plan shall be retroactive to the date of termination of the period of active duty. (B) when such employee or member insured is not reemployed or restored to participation in the group upon return to civilian status, he or she shall be entitled to the conversion and continuation rights provided by subsections (e) and (m) of this section. . . .

(7) A group policy . . . shall provide that if all or any portion of the insurance on an employee or member insured under the policy ceases because the employee or member insured is ordered to active duty as defined in subsection (o) of this section, such employee or member insured shall be entitled, without evidence of insurability, upon application to continue his or her hospital, surgical or medical expense insurance for himself or herself and his or her eligible dependents, under the supplementary conversion and continuation rights provided for herein, subject to all of the group policy's terms and conditions applicable to those forms of benefits and to the following conditions: (A) continuation shall not be available for: (i) any person who is covered, becomes covered or could be covered by title XVIII of the United States Social Security Act (Medicare) as amended or superseded or (ii) 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, except that the coverage available to active duty members of the uniformed services and their family members shall not be considered a group under the terms of this subsection, and except that 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. (B) an employee or member insured who wishes continuation of coverage pursuant to this subsection must request such continuation in writing within sixty days of being ordered to active duty. (C) an employee or member insured electing continuation pursuant to this subsection must pay to the group policyholder or his or her employer, but not more frequently than on a monthly basis in advance, the amount of the required premium payment, but not more than the group rate for the benefits being continued under the group policy on the due date of each payment.

(8) The supplementary conversion and continuation rights provided for herein shall apply to: (A) policies not covered by Chapter 18 of the Employee Retirement Income Security Act, or Chapter 6A of the Public Health Service Act, (B) policies covered by Chapter 18 of the Employee Retirement Income Security Act, or Chapter 6A of the Public Health Service Act, when active duty for reservists and the refusal of an employer to voluntarily maintain coverage for such period of active duty is not considered a qualifying event.

(o) To be entitled to the right defined in subsection (n) of this section a person must be a member of a reserve component of the armed forces of the United States, including the National Guard, who either: (A) voluntarily or involuntarily enters upon active duty (other than for the purpose of determining his or her physical fitness and other than for training), or (B) has his or her active duty voluntarily or involuntarily extended during a period when the president is authorized to order units of the ready reserve or members of a reserve component to active duty, provided that such additional active duty is at the request and for the convenience of the federal government, and (C) serves no more than four years of active duty.

New York Insurance Law § 4305(g) & (h) provides identical protections to individuals issued contracts by not-for profit Health Service Corporations and all HMOs.

Applicability of Circular Letter 29 to the New York National Guard

Since activated members of the New York National Guard are specifically included among those entitled to the protections afforded by New York Insurance Law §§ 3216, 3221, 4304 and 4305, those individuals are encompassed within those covered by the Circular Letter.

Continuation of Coverage without Payment of Premiums

When the pertinent provisions of New York Insurance Law §§ 3216 and 4304 are read in conjunction with New York Military Law § 316(3), the comprehensive legislative scheme becomes apparent. If the member of the New York National Guard who is activated opts to suspend individual accident & health coverage, no premiums are owing because no coverage will be provided. Coverage may be reinstated as of the release from active duty. If the activated member opts to continue individual coverage, the insurer is entitled to premiums for the continuing coverage. In that case, the activated member may either continue to pay premiums or the insurer has the right to deduct the premiums from any benefits that may be due and owing.

Applicability of Military Law to Group Coverage

New York Military Law § 316(3), by its terms, protects only those persons covered by individual accident & health insurance policies and contracts. Such policies and contracts are those regulated in accordance with New York Insurance Law §§ 3216 and 4304, as well group remittance contracts subject to New York Insurance Law § 4305.

The amendment to New York Military Law §316 to protect accident & health insurance policies and contracts was part of a larger enactment increasing protections available to military reservists. 1981 N.Y. Laws 360. The Memorandum in Support of the bill, drafted by the State Department of Military & Naval Affairs after activation of the New York National Guard because of public employee strikes in New York City, stated, inter alia:

The addition of a provision providing for the non-cancellability of accident and health insurance policies is necessary because no protection currently exists. In the active military service, servicemen and their dependents are provided medical care by the military. There are, however, no similar provisions for the organized militia or for their dependents while they are in the active military service of the State of New York. Health care costs are enormous and the loss of coverage could be devastating if the protection of accident and health insurance were lost.

The subsequent amendments to New York Insurance Law §§ 3216, 3221, 4304, and 4305 were also part of a comprehensive enactment increasing the protections afforded to military reservists. The Memorandum in Support of the bill, drafted by the State Department of Military & Naval Affairs, stated with respect to the New York Insurance law that these provisions would "clarify continuation and conversion rights" for military reservists. In approving the enactment, 1991 N.Y. Laws 467, the Governor commented that these provisions would "provide members of reserve components, including the National Guard, with the right to resume insurance coverage which was suspended while the members were on active duty".

While there is no New York Military Law counterpart to § 316(3) protecting group accident & health insurance policies and contracts, substantial protections are found in New York Insurance Law §§ 3221 and 4305.

Protection of Family/Dependent Coverage

New York Insurance Law §3216(c)(3) provides, in pertinent part:

(c) No policy of accident and health insurance shall be delivered or issued for delivery to any person in this state unless: . . . (3) it purports to insure only one person, except that a policy may insure, originally or by subsequent amendment, members of a family, as defined herein, upon the application of an adult member of the family who shall be deemed the policyholder.

New York Insurance Law § 4304(d)(1) similarly allows "family coverage" for individuals covered under individual and group remittance policies and contracts issued by not-for profit Health service corporations and all HMOs.

Since the protections of New York Military Law §316(3) are provided to the entire policy, if the individual New York National Guard member has purchased "family coverage", where the premiums are paid individually or on a group remittance basis, those dependents entitled to coverage under the policy would be encompassed within the Military Law’s provisions.

For further information, you may contact Principal Attorney Alan Rachlin at the New York City office.