The Office of General Counsel issued the following informal opinion on October 21, 2002 representing the position of the New York State Insurance Department.
Re: Life Insurance Company Compliance with the Insurance Certificate Requirements of N.Y. Ins. Law § 3221(a)(6) by the Use of Electronic Media
Would a life insurance company (the "Life Insurer") meet its obligation under N.Y. Ins. Law § 3221(a)(6) (McKinney Supp. 2002) to issue a certificate of insurance either to the employer or person in whose name a group accident and health insurance policy is issued, for delivery to each member of the insured group, if the Life Insurer provides the employer with an electronic version of the certificate of insurance for the employer to place on its Intranet where the employer has agreed to provide the certificate of insurance to its insured employees in accordance with the requirements for disclosure by means of electronic media contained in the federal regulation, Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 C.F.R. § 2520.104b-1 (as amended at 67 Fed. Reg. 17264, 17274, Apr. 9, 2002, effective Oct. 9, 2002) (the ERISA Regulation")?
Yes, the Life Insurer would meet its statutory obligation under N.Y. Ins. Law § 3221(a)(6) (McKinney Supp. 2002) by issuing an electronic version of the certificate of insurance to the employer (or other group policyholder) where the employer has undertaken to deliver the certificate of insurance to each group member by placing it on its Intranet and to comply with the requirements for disclosure by means of electronic media that are contained in the ERISA Regulation. Should it thereafter come to the Life Insurers attention that delivery of the certificate to each member is not being achieved by the employer, the Life Insurer should take action to assure that delivery to each member is accomplished.
Currently, the Life Insurer sends a supply of hard copies of blank certificates of insurance to a group health insurance policyholder. It is proposed that in lieu of sending a supply of certificates (presumably in hard copy) to an employer, the Life Insurer would issue an electronic version of the certificate of insurance to the employer and permit the employer (the policyholder under a group health policy) to place the electronic version of the certificate of insurance on its Intranet. The Life Insurer would use this method only in instances where the employer agrees to provide the electronic version of the certificate of insurance to the members of the insured group (its employees) in accordance with the most recent amendments to the ERISA Regulation (effective October 9, 2002) as to its requirements for disclosure by means of electronic media.
The following summary of the regulatory obligations of an ERISA group health plan administrator to furnish disclosure documents through electronic media is provided:
The plan administrator obtains consent from each participant and takes appropriate measures to ensure that documents on the system are actually received by the participants (i.e., the system uses return-receipt electronic mail features or conducts periodic reviews of surveys to confirm receipt).
The electronically delivered documents are prepared using the applicable style, format and content requirements.
Each participant is notified by electronic means, or in writing, of the documents that will be furnished electronically, the significance of the documents, and the participants right to request, free of charge, a paper copy of each document.
Upon the request of the participant, the plan administrator must provide a paper copy of any document delivered by electronic means. The documents will be provided free of charge when required by law.
Plan administrators may only furnish documents electronically to employee participants who have the ability to effectively access documents furnished by electronic means at any location where the participant is reasonably expected to perform his/her duties as an employee and who have access to the electronic information system as an integral part of those duties. Non-employee participants must affirmatively demonstrate the ability to access information in electronic form and must provide an address for receipt, if necessary.
Whether or not the group insurance policy in question is part of an ERISA health plan is unknown. However, this inquiry addresses only the issue of compliance with the New York Insurance Law statute, and not ERISA. We do not herein opine as to whether, if the group insurance policy in question was part of an ERISA Plan, the administrator of the plan would be in compliance with the federal ERISA Regulation, Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 ("ERISA"), that is located at 29 C.F.R. § 2520.104b-1 (as amended at 67 Fed. Reg. 17264, 17274, Apr. 9, 2002, effective Oct. 9, 2002). Instead, we herein consider the requirements for the use of electronic media under the ERISA Regulation only as to whether compliance therewith would also meet the obligations under N.Y. Ins. Law § 3221(a)(6) (McKinney Supp. 2002). Questions concerning the Life Insurers compliance with the ERISA Regulation should be addressed to the Department of Labor.
Under ERISA, plan administrators of covered employee benefit plans are obligated to provide specified disclosures to plan participants and others. The ERISA Regulation is designed to assure that actual notice is provided by the administrator to each member of an ERISA health insurance plan and that the member actually receives the disclosures required.
N.Y. Ins. Law § 3221(a)(6) (McKinney Supp. 2002) provides as follows:
(a)(6) That the insurer shall issue either to the employer or person in whose name such policy is issued, for delivery to each member of the insured group, a certificate setting forth in summary form a statement of the essential features of the insurance coverage and in substance the following provisions of this subsection.
Under the foregoing statute the insurer of a group (or blanket) health insurance policy is obligated to provide an insurance certificate to the employer or other policyholder for delivery to each member of the group. The certificate of insurance describes the essential features of the coverage being afforded. Where the insurer proposes to fulfill its statutory obligation by electronic means, and the employer also intends to use electronic means to effect delivery to the member, the particular concern is that those insured members of the group who are not able to receive the electronic version of the certificate because they lack the ability to access these materials electronically, also receive delivery of the certificate.
The Life Insurer takes the position that it would be in compliance with the obligations of the above-cited Insurance Law statute in the instant situation because the employer (policyholder) has undertaken to comply with the ERISA administrator disclosure requirements by electronic means as specified in the ERISA Regulation. As a general matter the Department has no objection to the use of electronic media to satisfy the certificate requirements contained in N.Y. Ins. Law § 3221(a)(6) (McKinney Supp. 2002). Moreover, the requirements for the use of electronic media under the ERISA Regulation are quite stringent, designed to assure that disclosure is made to all ERISA plan members.
Under the New York statute the members of the group must each actually receive delivery of the insurance certificate, and that can be accomplished either in electronic or hard copy form. If the employer makes the delivery of the certificate of insurance to employees by electronic means, either in compliance with the requirements of the ERISA Regulation, or by any other means which results in actual delivery of the certificate of insurance to each member of the group, the Life Insurer would thereby satisfy its obligation to make delivery under the New York statute. The Department would expect that, if it came to the Life Insurers attention that certain members of the group were not receiving delivery of the certificate of insurance, the Life Insurer would have to take action to ensure that delivery to each member is accomplished.
For further information you may contact Associate Attorney Barbara Kluger at the New York City Office.
1 Depending upon the structure of an ERISA group health plan the insurer providing the group health insurance policy for the plan could also be the administrator of the plan and therefore be obligated to comply both with the notice required in N.Y. Ins. Law § 3221(a)(6) as well as the disclosure requirements of ERISA.