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

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on January 3, 2003, representing the position of the New York State Insurance Department.

RE: Legal Prohibition on Purchase of Individual Health Insurance Coverage Where Group Coverage is Available

Question Presented:

Does any provision of the New York Insurance Law prohibit an individual from purchasing health insurance on their own where the individual’s employer provides group health coverage?

Conclusion:

Nothing in the New York Insurance Law or Regulations prohibit an individual from procuring coverage separate and apart from the employer-offered coverage. However, the Regulations do allow health insurers to refuse to issue an individual policy to a person eligible for comparable group coverage through an employer.

Facts:

An inquirer stated that his employer offers health coverage administered by a licensed insurer. The inquirer asked if he could independently obtain individual health coverage from a different licensed insurer.

Analysis:

No provision of the New York Insurance Law or Regulations prohibits an individual from obtaining individual health insurance coverage independent of an employer-provided group policy. Indeed, the obtaining of multiple coverages is contemplated by both the law and the regulations. For example, N.Y. Ins. Law § 3216(d)(2) (McKinney Supp. 2003) provides policy provisions that an insurer may include in an individual health insurance policy in order to preclude the duplication of benefits or over-insurance. That provision states, in pertinent part, as follows:

(D) INSURANCE WITH OTHER INSURERS: If there be other valid coverage, not with this insurer, providing benefits for the same loss on a provision of service basis or on an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability under any expense incurred coverage of this policy shall be for such proportion of the loss as the amount which would otherwise have been payable hereunder plus the total of the like amounts under all such other valid coverages for the same loss of which this insurer had notice bears to the total like amounts under all valid coverages for such loss, and for the return of such portion of the premiums paid as shall exceed the pro-rata portion for the amount so determined. For the purpose of applying this provision when other coverage is on a provision of service basis, the "like amount" of such other coverage shall be taken as the amount which the services rendered would have cost in the absence of such coverage. (If the foregoing policy provision is included in a policy which also contains the next following policy provision there shall be added to the caption of the foregoing provision the phrase "--- EXPENSE INCURRED BENEFITS". The insurer may, at its option, include in this provision a definition of "other valid coverage", approved as to form by the superintendent, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and by hospital or medical service organizations, and to any other coverage the inclusion of which may be approved by the superintendent. In the absence of such definition such term shall not include group insurance, automobile medical payments insurance, or coverage provided by hospital or medical service organizations or by union welfare plans or employer or employee benefit organizations. For the purpose of applying the foregoing provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute (including any workers` compensation or employer`s liability statute) whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third party liability coverage shall be included as "other valid coverage".)

(E) INSURANCE WITH OTHER INSURERS: If there be other valid coverage, not with this insurer, providing benefits for the same loss on other than an expense incurred basis and of which this insurer has not been given written notice prior to the occurrence or commencement of loss, the only liability for such benefits under this policy shall be for such proportion of the indemnities otherwise provided hereunder for such loss as the like indemnities of which the insurer had notice (including the indemnities under this policy) bear to the total amount of all like indemnities for such loss, and for the return of such portion of the premium paid as shall exceed the pro-rata portion for the indemnities thus determined. (If the foregoing policy provision is included in a policy which also contains the next preceding policy provision there shall be added to the caption of the foregoing provision the phrase "--- OTHER BENEFITS". The insurer may, at its option, include in this provision a definition of "other valid coverage", approved as to form by the superintendent, which definition shall be limited in subject matter to coverage provided by organizations subject to regulation by insurance law or by insurance authorities of this or any other state of the United States or any province of Canada, and to any other coverage the inclusion of which may be approved by the superintendent. In the absence of such definition such term shall not include group insurance, or benefits provided by union welfare plans or by employer or employee benefit organizations. For the purpose of applying the foregoing policy provision with respect to any insured, any amount of benefit provided for such insured pursuant to any compulsory benefit statute (including any workers` compensation or employer`s liability statute) whether provided by a governmental agency or otherwise shall in all cases be deemed to be "other valid coverage" of which the insurer has had notice. In applying the foregoing policy provision no third party liability coverage shall be included as "other valid coverage".)

It should be further noted that New York Insurance Regulation 62 [N.Y. Comp. Codes R. & Regs., tit. 11, § 52.23 (1995)] sets forth coordination of benefits rules for use where duplicate coverages exist.

Although no legal prohibition exists it is important to note that an insurer that offers individual health insurance policies is permitted to refuse to provide coverage to an individual who is eligible for employer-provided group health coverage. Regulation 145 provides, in pertinent part, as follows:

Applicants for group or individual insurance may not be denied coverage based upon eligibility for coverage under another group or individual plan unless the applicant is actually covered by another plan. However, applicants for an individual health insurance policy may be denied coverage where the individual is eligible for comparable group coverage through an employer.

N.Y. Comp. Codes R. & Regs., tit. 11, § 360.5(d) (1998).

For further information you may contact Supervising Attorney Michael Campanelli at the New York City Office.