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

George E. Pataki
Governor

Howard Mills
Superintendent

The Office of General Counsel issued the following opinion on July 7, 2005, representing the position of the New York State Insurance Department.

Re: Employment Based Group Insurance, Minimum Hours of Work.

Issue:

Does New York impose any limit on the minimum number of hours that an employee must work to be eligible for employment based group insurance?

Conclusion:

Yes. The New York Insurance Law (McKinney 2000 and 2005 Supplement) and the regulations promulgated thereunder do impose requirements relative to minimum hours on insurers, but they do not impose any requirements on employers.

Facts:

No facts were furnished.

Analysis:

New York Insurance Law § 4216(b)(1) (McKinney 2000 and 2005 Supplement), dealing with group life insurance, authorizes issuance of:

a policy issued to an employer or to a trustee or trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, insuring with or without evidence of individual 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 . . . for amounts of insurance 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 wholly from the employer's funds or funds contributed by him 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, such policy must insure not less than fifty percent of such eligible employees or, if less, fifty or more of such employees. . . .

New York Insurance Law § 4216(b) also lists various employer based associations that may purchase group life insurance.

New York Insurance Law § 4235(c)(1)(A) (McKinney 2000 and 2005 Supplement), dealing with group health insurance, authorizes issuance of:

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 . . . 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

New York Insurance Law § 4235(c)(1) lists various employer based associations that may purchase group health insurance.

New York Insurance Law § 4235(d)(1) further provides:

In this section, for the purpose of insurance hereunder: ‘employees’ includes the officers, managers, employees and retired employees of the employer and of subsidiary or affiliated corporations of a corporate employer, and the individual proprietors, partners, employees and retired employees of affiliated individuals and firms controlled by the insured employer through stock ownership, contract or otherwise; ‘employees’ may be deemed to include the individual proprietor or partners if the employer is an individual proprietor or a partnership; and ‘employees’ as used in subparagraph (A) of paragraph one of subsection (c) hereof may also include the directors of the employer and of subsidiary or affiliated corporations of a corporate employer.

1992 N.Y. Laws 501 effected a major reform of health insurance in requiring open enrollment and community rating of individual and small group (less than 50 employees) health insurance. In order to effectuate the requirements of 1992 N.Y. Laws 501, the Insurance Department promulgated a Regulation, N.Y. Comp. Codes R & Regs. tit. 11, Part 360 (1998) (Regulation 145). N.Y. Comp. Codes R. & Regs. tit 11, § 360.3 (1998) provides:

No insurer may restrict or limit eligibility for individual or small group policies except in the following ways: . . . (3) A required number of work hours to qualify as an employee, not to exceed 20 hours per week. . . . .

A New Jersey requirement was cited that defines full time employment as no more than 25 hours per week. That requirement, which is part of New Jersey’s program of health insurance for small employers, is imposed, as is N.Y. Comp. Codes R. & Regs. tit. 11, § 360.3(a)(3), on the insurer, not the employer.

The provision of health benefits to employees constitutes an employee welfare benefit plan, as defined in the Employee Retirement Income Security Act (ERISA). 29 U.S.C.A. § 1002(1) (West 1999):

The terms ‘employee welfare benefit plan . . . mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer . . . to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death . . . .

29 U.S.C.A. § 1144 (West 1999) provides:

(a) Supersedure; . . . Except as provided in subsection (b) of this section, the provisions of this title . . . shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 4(a) and not exempt under section 4(b). . . .

(b) Construction and application. . . . (2) (A) Except as provided in subparagraph

(B), nothing in this title shall be construed to exempt or relieve any person from any law of any State which regulates insurance, banking, or securities. (B) Neither an employee benefit plan described in section 4(a) which is not exempt under section 4(b) . . . nor any trust established under such a plan, shall be deemed to be an insurance company or other insurer . . . or to be engaged in the business of insurance . . . for purposes of any law of any State purporting to regulate insurance companies, insurance contracts . . . .

In accordance with 29 U.S.C.A. § 1144(a), no state may prescribe the minimum or maximum number of hours an employee must work in order to be eligible for health benefits. In accordance with 29 U.S.C.A. § 11144(b)(2)(A), as construed in Kentucky Association of Health Plans v. Miller, 538 U.S. 329 (2003), states, such as New York and New Jersey, may impose such requirements on insurers, notwithstanding that such requirements affect employee welfare benefit plans.

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