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

Eliot Spitzer
Governor

Eric Dinallo
Superintendent

The Office of General Counsel issued the following opinion on August 27, 2007 representing the position of the New York State Insurance Department.

Re: Group Health Insurance, Certificates and Explanations of Benefits

Questions Presented:

1. Is either the employer or the insurer required under the New York Insurance Law to furnish an employee with a Certificate of Coverage evidencing the coverage provided under a group health insurance policy?

2. Does the EOB as described adequately furnish the required information in accordance with N.Y. Ins. Law § 3234 (McKinney 2006)?

Conclusions:

1. Under the New York Insurance Law, an insurer is required to issue a Certificate of Coverage to the employer for delivery to the covered employee. But, the Insurance Law does not impose an obligation on the employer to provide a Certificate. Any obligation of the employer to provide a Certificate is governed by the federal Employee Retirement Income Security Act (ERISA), 29 U.S.C.A. § 1001 et seq. (West 2003),1.

2. The EOB described does not appear to comply with Insurance Law § 3234 because the EOB neither sets forth the information required by the statute, nor sets forth enough information for the insured to otherwise discern the information required by Insurance Law § 3234.

Facts:

An individual reports that he is insured under the [Specified]Plan” through his employment, and that neither the employer nor the employer’s insurers have furnished him with a certificate setting forth his insurance coverage.

The [“Specified] Plan” jointly consists of a health maintenance organization (“HMO”) contract issued by an HMO with a certificate of authority issued in accordance with New York Public Health Law § 4403, and a policy covering out-of network services issued by [Specified] Insurance Company, an insurer organized in accordance with Insurance Law Article 42.

The inquirer further reports that the “EOB states that a maximum amount payable for a [procedure] is based on A*B where A = an index level (i.e. Health Association Index) [and] B = the percentile ‘purchased by the group member.’”

In a subsequent telephone conversation, the inquirer also reported that the EOB does not specify either the index used or the percentile purchased by the employer, and that neither the “insurer” nor his employer will furnish either the identity of the plan administrator or information that could enable him to calculate the maximum amount payable.

Analysis:

1. Issuance of Certificates

Insurance Law § 3221(a) sets forth standard provisions for group health insurance policies issued by commercial insurers and is relevant to the inquiry. Paragraph (6) of the statute requires:

That the insurer shall issue either to the employer or person in whose name such policy is issued, for delivery to each member of the insured group, a certificate setting forth in summary form a statement of the essential features of the insurance coverage . . . .

Insurance Law § 4305(a), which is made applicable to HMOs pursuant to Public Health Law § 4406(1) establishes a similar requirement. But nothing in the Insurance Law speaks to the delivery of certificates to the insured employees.

Nonetheless, where, as here, an employee is covered by an “employee welfare benefit plan” as defined in ERISA, that statute imposes specific requirements on the employer or plan administrator. Indeed, 29 U.S.C.A. § 1021(a) provides that the plan administrator must furnish each participant with a Summary Plan Description (“SPD”). Requirements for the content of the SPD are set forth in 29 U.S.C.A. § 1022(b):

The summary plan description shall contain the following information: The name and type of administration of the plan; in the case of a group health plan . . .whether a health insurance issuer . . . is responsible for the financing or administration (including payment of claims) of the plan and (if so) the name and address of such issuer; . . . the name and address of the administrator; names, titles and addresses of any trustee or trustees (if they are persons different from the administrator); . . . the procedures to be followed in presenting claims for benefits under the plan including the office at the Department of Labor through which participants and beneficiaries may seek assistance or information regarding their rights under this Act and the Health Insurance Portability and Accountability Act of 1996 with respect to health benefits that are offered through a group health plan . . . and the remedies available under the plan for the redress of claims which are denied in whole or in part . . . .

It is common for employers to appoint as the plan administrator the insurer insuring the benefits. In such cases, the insurer/administrator may fulfill its obligations both under Insurance Law and ERISA by issuing and distributing a single document, which is both the certificate and SPD, to the insured employee.

The Insurance Department does not enforce ERISA, which is a federal statute. Any questions concerning the SPD or other ERISA requirements should be directed to:

Employee Benefit Security Administration
United States Department of Labor
33 Whitehall Street
New York, NY 10004.

2. Explanations of Benefits

Insurance Law § 3234, which addresses EOBs for most health insurance, is relevant to the second inquiry. Subsection (a) generally requires all insurers, including HMOs, to furnish an EOB. Where the insured utilizes a participating health care provider and the only out-of-pocket expense is an applicable deductible, subsection (c) requires an EOB only when requested by the insured. Subsection (b) sets forth the requirements for an EOB:

The explanation of benefits form must include at least the following: (1) the name of the provider of service the admission or financial control number, if applicable; (2) the date of service; (3) an identification of the service for which the claim is made; (4) the provider's charge or rate; (5) the amount or percentage payable under the policy or certificate after deductibles, co-payments, and any other reduction of the amount claimed; (6) a specific explanation of any denial, reduction, or other reason, including any other third-party payor coverage, for not providing full reimbursement for the amount claimed; and (7) a telephone number or address where an insured or subscriber may obtain clarification of the explanation of benefits, as well as a description of the time limit, place and manner in which an appeal of a denial of benefits must be brought under the policy or certificate and a notification that failure to comply with such requirements may lead to forfeiture of a consumer's right to challenge a denial or rejection, even when a request for clarification has been made.

Here, the EOB described is deficient in that it does not appear to provide the information required by Insurance Law § 3234(b) or information that would enable an insured to calculate the required information. However, since a copy of the actual EOB has not been provided to the Department, the agency’s Office of General Counsel cannot provide a definitive answer.

Any complaint concerning the failure to furnish a Certificate of Coverage and the contents of the EOB should be directed to the Department’s Consumer Services Bureau.

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

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1 While ERISA generally preempts state laws governing employee welfare benefit plans, see 29 U.S.C.A. § 1144(a), and although the United States Department of Labor has issued a claims settlement regulation, 29 C.F.R. § 2560.503-1 (2001), Insurance Law § 3234 is saved from preemption both by 29 U.S.C.A. § 1144(b)(2)(A) (as a law regulating insurance) and by the regulation itself.