The Office of General Counsel issued the following opinion on October 14, 2004, representing the position of the New York State Insurance Department.
Re: Group Health Policy Issued in Ohio Covering New York Group Members & Medical Condition Questionnaire
May an insurer, which is authorized to issue group health insurance policies in both Ohio and New York, issue a group health policy in Ohio to an employer in Ohio, and provide group health coverage under such policy to the employers employees that work in Ohio and New York if the insurer requires, as a precondition to group coverage, every group member, including the groups New York employees, to fully complete an insurance application that contains a pre-existing medical condition questionnaire?
Please see analysis below.
An Ohio and New York licensed insurance agent, who represents an insurer that is authorized to issue group accident and health insurance policies in both Ohio and New York, would like to sell a group health policy in Ohio to an employer in Ohio that would provide group health coverage to the employers employees that work in both Ohio and New York. The group consists of employees of graphic lamination manufacturing plants. As a precondition to insurance coverage, the insurer requires every group member, including the groups New York employees, to fully complete an insurance application that contains a pre-existing medical condition questionnaire. The insurer will use the information gathered from the group members answers to the questionnaire to assist it in calculating an appropriate premium for the group policy, but will not use such information to decide whether to issue or decline group coverage.
With regard to group health insurance policies and contracts that are issued in New York, the New York Insurance Law provides that group health insurance policies and contracts, which cover between two and fifty employees (a "small group"), are community-rated and are subject to open enrollment.1 Accordingly, the insurer may not issue a group health policy in New York State to cover a small group if the insurer uses the information gathered from the answers to the questionnaire to decide whether to issue coverage for the employee group.
But an authorized insurer may issue a group health insurance policy outside of New York to an employer to cover such employers employees that work or reside in New York without having to comply with the New York Insurance Law if such group is denominated in N.Y. Ins. Law § 3201(b)(1), which provides the following in pertinent part:
(b)(1) No policy form shall be delivered or issued for delivery in this state unless it has been filed with and approved by the superintendent as conforming to the requirements of this chapter and not inconsistent with law. A group life, group accident, group health, group accident and health or blanket accident and health insurance certificate evidencing insurance coverage on a resident of this state shall be deemed to have been delivered in this state, regardless of the place of actual delivery, unless the insured group is of the type described in: (A) section four thousand two hundred sixteen, except paragraph four where the group policy is issued to a trustee or trustees of a fund established or participated in by two or more employers not in the same industry with respect to an employer principally located within the state, paragraph twelve, thirteen or fourteen of subsection (b) thereof; (B) section four thousand two hundred thirty-five except subparagraph (D) where the group policy is issued to a trustee or trustees of a fund established or participated in by two or more employers not in the same industry with respect to an employer principally located within the state, subparagraph (K), (L) or (M) of paragraph one of subsection (c) thereof.
N.Y. Ins Law § 4235(c)(1)(A) provides:
(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) 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.
Accordingly, assuming that the employee group described under the presented facts is denominated in N.Y. Ins. Law § 3201(b)(1), the insurer may require the groups New York employees to complete the questionnaire and may use the information gathered from such questionnaire to decide whether to issue coverage for the employee group even if it is a small group because group health insurance policies issued outside of New York to such denominated groups are not subject to the New York Insurance Law.
In addition, N.Y. Ins. Law § 3201(b)(2) (McKinney Supp. 2004) requires domestic insurers to file, inter alia, the group health policy forms that such insurers issue for delivery outside of New York State.
For further information you may contact Senior Attorney Kristian Earl Lynch at the New York City Office.
1 N.Y. Ins. Law §§ 3231(a), 4317(a) (McKinney Supp. 2004).