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

RE: Waiver of Group Health Insurance Coverage

Question Presented

If an employer requires employee contribution toward health insurance coverage, may an employee waive coverage under the plan?

Conclusion

Yes, under those circumstances, such coverage may be waived.

Facts

Since this was a general inquiry, no facts were provided.

Analysis

The provision of health insurance by an employer constitutes a welfare benefit plan as that term is defined under the Employee Retirement Income Security Act (ERISA). 29 U.S.C.A. § 1002(1) (West 1999). While ERISA generally preempts state laws, 29 U.S.C.A. 1144(a) (West 1999), insurance laws are excepted from the preemption. 29 U.S.C.A. § 1144(b)(2)(A). This provision has been construed to allow state insurance laws to apply to insured plans, notwithstanding that they may affect an ERISA welfare benefit plan. Metropolitan Life v. Massachusetts, 471 U.S. 724 (1985).

New York Insurance Law § 4235(c)(1)(A) (McKinney 2000) authorizes the issuance of group accident & health insurance through:

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. . . . 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. (emphasis added)

There are similar requirements for policies issued to trade associations, New York Insurance Law § 4235(c)(1)(B), and Taft-Hartley Funds. New York Insurance Law § 4235(c)(1)(D).

Accordingly, if there is a requirement of employee contribution to the policy, an employee may opt out of the coverage.

For further information one may contact Principal Attorney Alan Rachlin at the New York City Office.