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 August 31, 2006, representing the position of the New York State Insurance Department.

Re: Insurance Coverage for Disabled Adult Children

Question Presented:

May a mentally retarded adult child moving into a group home retain coverage under his/her parents’ group health insurance contract?

Conclusion:

If such adult child remains "chiefly dependent" upon his/her parent(s) for "support and maintenance" then the adult child will remain covered under the insurance contract. If, however, the adult child will no longer be "chiefly dependent" upon his/her parents, as a result of the move, the coverage will cease.

Facts:

The mother of a mentally retarded 24 year-old man is worried that her group insurance contract will no longer cover her son if he moves from the family home to a group home or assisted living facility. The son, who is incapable of self-sustaining employment, currently receives Supplemental Security Income (SSI), with his parents paying for the remainder and majority of his needs. If he moves into the group home or assisted living facility, he would receive SSI of $800 monthly, $680 of which would go to the cost of living in the home and the remainder for his personal needs. Medicaid would cover the cost of his medical care. His parents would continue to pay between $5,700 and $7,100 annually to cover the cost of the child’s activities, hobbies (Special Olympics, video and computer games, etc), medications and medical treatment not covered by the insurance, vitamins, trips, clothing, and other items that do not fit into his personal allowance.

Analysis:

N.Y. Ins. Law § 4305(c)(1) (McKinney 2000 and Supp. 2006) "Group contracts" states that:

[a]ny such contract may provide that benefits will be furnished to a member of a covered group, for himself, his spouse, his child or children, or other persons chiefly dependent upon him for support and maintenance; provided that a contract under which coverage of a dependent of a member terminates at a specified age shall, with respect to an unmarried child who is incapable of self sustaining employment by reason of mental illness, developmental disability, mental retardation…and who became so incapable of prior to attainment of the age at which dependent coverage would otherwise terminate and who is chiefly dependent upon such member for support and maintenance, not so terminate while the contract remains in force and the dependent remains in such condition, if the member has within thirty-one days of such dependent’s attainment of the termination age submitted proof of such dependent’s incapacity as described herein… [Emphasis supplied]

The insurance policy states in section 2(1)(c) that "[a]ny unmarried dependent child, regardless of age, who is incapable of self sustaining employment because of mental retardation, mental illness, or developmental disability…" may be covered under the group contract. The contract further states in section 16(2)(G) that "[c]overage of a subscriber’s child…will automatically terminate on the date the child no longer qualifies as a dependent…"

Although the insurance company advised the Department that it interprets "chiefly dependent" to mean that the person receives fifty per cent or more of his/her support from his/her parent(s), the insurance contract itself does not define "dependent." The United States Court of Claims held in Odlin v. U.S., 74 Ct. Cl. 633, 636 (1932), that "chiefly dependent" does not have an explicit definition but rather "each case…must stand upon its own particular facts, and that no hard and fast rule can be laid down arbitrarily fixing the value of property, or the amount of income received…as entirely determinative of the question as to whether [a person] is ‘dependent’ within the meaning of the law."

While the company’s interpretation of the phrase "chiefly dependent" doesn’t appear to be unreasonable, only a court of competent jurisdiction may make a conclusive determination.

This opinion is limited to a review of the applicable insurance law as pertaining to dependency and assumes that all income is reported to the Social Security Administration in accordance with the appropriate SSI requirements.

For further information you may contact Associate Attorney Pascale Jean-Baptiste at the New York City Office.