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

George E. Pataki
Governor

Howard Mills
Acting Superintendent

The Office of General Counsel issued the following opinion on April 22, 2005 representing the position of the New York State Insurance Department.

 Re: Group Health Insurance, Dependent Continuation Right

Question Presented:

Is an individual who, by reason of age, is no longer entitled to coverage as a dependent under a group health insurance policy entitled to continuation of coverage for a period of 36 months?

Conclusion:

Yes, if the dependent is not entitled to continue coverage under another provision of the New York Insurance Law (McKinney 2000 and 2005 Supplement), there is such a required continuation period.

Facts:

In addition to the private practice of law, an attorney is employed on a part-time basis by a Village. He and his dependents are insured under a health insurance policy purchased by the Village, which has fewer than 25 employees covered under the policy. The policy issued to the Village covers dependent children who are full time college students until December 31 of the year they turn 25 years old.

The attorney’s son turned 25 on September 13, 2003. Therefore, absent a continuation provision, he would have been covered under the Village’s policy only until December 31, 2003. Having made a timely application in accordance with policy provisions, the son continued coverage under the Village’s policy for an unspecified period commencing on January 1, 2004.

Since, because of an orthopedic condition, the son is not presently employable, it is the attorney’s belief that it is important that he continue to be covered under the Village’s policy for the maximum allowable period of time. Confirmation is sought of an earlier conversation with the Department’s Health Bureau that the applicable period is 36 months.

Analysis:

New York Insurance Law § 4235(f)(1) (McKinney 2000 and 2005 Supplement) authorizes coverage of dependent children but does not provide a maximum age at which such coverage will terminate (leaving that age to the insurer), except for children who are incapable of self-support "by reason of mental illness, developmental disability, mental retardation or physical handicap and who became so incapable prior to attainment of the age at which dependent coverage would otherwise terminate and who is chiefly dependent upon such employee for support and maintenance." Accordingly, depending upon the son’s condition, the insurer may be required, in accordance with New York Insurance Law § 4235(f)(1) to continue coverage until the son is physically capable of self-supporting employment.

It is presumed that, whatever the son’s condition, he is not disabled within the meaning of the Social Security Act, 42 U.S.C.A. § 423 (West 2003). Accordingly, any special rules with respect to such individuals will not be considered in this analysis.

If a child does not meet the standard of New York Insurance Law § 4235(f)(1), then continuation benefits for most such individuals are available through a provision in the Employee Retirement Income Security Act (ERISA), 29 U.S.C.A. § 1161 et seq. (West 1999 and 2003 Supplement). However, ERISA, 29 U.S.C.A. § 1003(b)(1) (West 1999 and 2003 Supplement) excludes governmental plans from coverage under ERISA.

The Federal continuation requirement for local governmental plans is set forth in a provision of the Public Health Service Act, 42 U.S.C.A. § 300bb-1 et seq. (West 2003). In accordance with 42 U.S.C.A. § 300bb-1(b)(1) (West 2003), there is no Federal continuation requirement for employers with fewer than 20 employees.

If the Federal requirement is applicable, 42 U.S.C.A.§ 300b-35) (West 2003) makes termination of coverage as a dependent in accordance with the terms of the plan a qualifying event and 42 U.S.C.A. § 300bb-2(2)(A)(ii) (West 2003) provides a continuation period of 36 months.

If the Federal requirement is not applicable, New York Insurance Law § 3221(m) (McKinney 2000 and 2005 Supplement), regulating policies of commercial health insurers, provides:

A group policy providing hospital, surgical or medical expense insurance for other than accident only shall provide that if all or any portion of the insurance on an employee or member insured under the policy ceases because of termination of employment or membership in the class or classes eligible for coverage under the policy, such employee or member shall be entitled without evidence of insurability upon application to continue his hospital, surgical or medical expense insurance for himself or herself and his or her eligible dependents, subject to all of the group policy's terms and conditions applicable to those forms of benefits and to the following conditions: (1) Continuation shall cease on the date which the employee, member or dependant first becomes, after the date of election: . . . (B) 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 which does not contain any exclusion or limitation with respect to any pre-existing condition of such employee, member or dependent, except 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.

. . .

(4) Subject to paragraph one of this subsection, continuation of benefits under the group policy for any person shall terminate at the first to occur of the following: . . . (C) In the case of an eligible dependent of an employee or member, the date thirty-six months after the date such person's benefits under the policy would otherwise have terminated by reason of . . . (iv) a dependent child ceasing to be a dependent child under the generally applicable requirements of the policy . . .

New York Insurance Law § 4305(e) (McKinney 2000 and 2005 Supplement), regulating contracts of not-for-profit health insurers and all Health Maintenance Organizations, has identical requirements.

Accordingly, if the son’s coverage validly terminated by reason of his age, the continuation coverage will not terminate until December 31, 2006.

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