OGC Op. No. 09-03-05
The Office of General Counsel issued the following opinion on March 16, 2009 representing the position of the New York State Insurance Department.
Re: Health Insurance, Coverage of Domestic Partner’s Dependent
1. Where an employer provides health insurance for its employees and their dependents under a group insurance policy, may the policy provide coverage to a minor child of the employee’s domestic partner?
2. Would the answer be different if the child in question does not primarily reside with the New York parent, although that parent is obligated to pay child support and is responsible for 50% of the cost of health insurance for the child?
3. If there is coverage and another plan, which plan is primarily responsible?
1. Yes. The policy may provide coverage for a minor child of an employee’s domestic partner, provided that the child is chiefly dependent upon the employee for support and maintenance.
2. No. Although those factors would not affect the ability of the insurer to provide insurance coverage for the minor child, the residence of the child and the child support arrangements might be significant to the employer and insurer in making a coverage determination.
3. In accordance with New York’s coordination of benefits rule, § 52.23(n) of N.Y. Comp. Codes R. & Regs. tit. 11, Part 52 (Regulation 62) (1995), the plan of the covered employee whose birthday falls earlier in the year would be primary.
The inquirer reports that she is employed by a library, which is part of a New York school district. The school district has opted to participate in the New York State Health Insurance Plan (NYSHIP), which provides health insurance benefits for employees of the State and participating local governments.
In addition, she reports that her opposite sex (i.e. male) domestic partner has a 16-year old daughter, who resides with her mother in North Carolina. Although the girl’s parents were never formally married, the domestic partner is obligated by court order to pay child support, in addition to being responsible for 50% of the cost of health insurance for the girl and any uninsured health expenses.
The inquirer desires to add the daughter of the domestic partner to her health insurance coverage. She understands that her coverage will be secondary to that provided under the insurance policy issued to the child’s mother. In response to her inquiry, the school district’s human resources office was unable to indicate whether such coverage is permissible.
The first question asks whether a group health insurance policy may provide coverage to a minor child of an employee’s domestic partner.
NYSHIP provides hospitalization benefits through Insurer A and major medical benefits though Insurer B. Both insurers are organized pursuant to Insurance Law Article 42, and are subject thereto.
Insurance Law § 4235(f)(1), which regulates policies of both insurers, is relevant to the inquiry. That statute provides:
Any policy of . . . group accident and health insurance may include provisions for the payment by the insurer of benefits for expenses incurred on account of hospital, medical or surgical care . . . for the employee or other member of the insured group, his spouse, his child or children, or other persons chiefly dependent upon him for support and maintenance . . . .
Here, the domestic partner’s child is not a child of the employee or her spouse, because a domestic partner is not a spouse. However, depending upon the terms of the policy, such a child may be covered as a dependent, provided that there is a demonstration to the insurer that the child is chiefly dependent upon the employee for support and maintenance, as provided in Insurance Law § 4235(f)(1). See, e.g., Opinion of Office of General Counsel dated December 20, 2001.
However, an insurer is not obligated to cover all of the classes specified in Insurance Law § 4235(f)(1), and may offer policies that cover the employee only, or the employee and spouse only. See OGC Opinions dated May 19, 2004 and November 19, 2001. Nor is an insurer who offers coverage to some dependents of the insured obligated to offer it to all potential classes of dependents, provided that the distinction is not based on unlawful discrimination. Id. These coverages are permissive, rather than mandatory, and depend upon what coverage the insurer offers and what the employer, as group policyholder, elects to purchase. Id.
Coverage under NYSHIP is governed by Article XI of the New York Civil Service Law . The coverage of dependents is governed by Civil Service Law § 164(1) (McKinney 2003):
Each employee shall be entitled to have his spouse and dependent children, as defined by the regulations of the president [of the civil service commission], included in the coverage upon agreeing to pay his contribution, if any, to the cost of such coverage for such dependents. The president shall adopt regulations governing the discontinuance and resumption by employees of coverage for dependents.
Dependent coverage is further governed by N.Y. Comp. Codes R. & Regs, tit. 4, § 73.1(h) (1992), which reads as follows:
The term dependent shall include the spouse of an employee or retired employee. It shall also include such person's unmarried child under 19 years of age . . . . The term child shall be deemed to include any natural born child, any legally adopted child, any stepchild dependent upon the employee or retired employee, and any child dependent upon the employee or retired employee during any waiting period prior to the finalization of the child's adoption by the employee or retired employee, and any child chiefly dependent on the employee or retired employee and permanently residing in the household of the employee or retired employee. . . .
It is the Insurance Department’s understanding from conversations with the Department of Civil Service that the Civil Service has determined that a domestic partner’s minor child may be treated as a dependent under NYSHIP coverage. However, it is the Insurance Department’s belief that before the Department of Civil Service, as employer, may request coverage, the statutory condition precedent of actual dependence on the employee must be demonstrated.
Information regarding dependent coverage is available on the Department of Civil Service website, at www.cs.state.ny.us. In addition, the Department of Civil Service would have to determine if the residence of the child’s custodial parent bars coverage under the NYSHIP, whether the relationship is too attenuated, and if the child may be added at this time.
The second question asks whether the fact that the minor child does not reside with the New York parent would affect the ability of the insurer to provide coverage for the child, even though the New York parent must pay child support and 50% of the child’s health insurance costs. Although those factors would not affect the insurer’s ability to provide insurance coverage to the child, the child’s residence and the New York parent’s support obligations may be significant to the employer and insurer in making a coverage determination.
With regard to the third question, which asks which of the possible plans is primarily responsible, coordination of benefits under health insurance policies in New York is governed by Regulation 62. 11 NYCRR § 52.23(n) of that regulation reads as follows:
(1) The primary plan must pay or provide its benefits as if the secondary plan or plans did not exist. A secondary plan may take the benefits of another plan into account only when, under these rules, it is secondary to that other plan.
(2) When there is a basis for a claim under more than one plan, a plan with a coordination of benefits provision complying with this section is a secondary plan which has its benefits determined after those of the other plan, unless the other plan has a COB provision complying with this section in which event the order of benefit determination rules will apply.
. . .
(3) The order of benefit payments is determined using the first of the following rules which applies: . . . (ii) except as stated in subparagraph (iii) of this paragraph, when a plan and another plan cover the same child as a dependent of different persons, called parents: (a) the benefits of the plan of the parent whose birthday falls earlier in a year are determined before those of the plan of the parent whose birthday falls later in that year; (b) if both parents have the same birthday, the benefits of the plan which covered the parent longer are determined before those of the plan which covered the other parent for a shorter period of time; (c) if the other plan does not have the rule described above, but instead has a rule based upon the gender of the parent, and if, as a result, the plans do not agree on the order of benefits, the rule in the other plan will determine the order of benefits; . . . (iii) if two or more plans cover a person as a dependent child of divorced or separated parents, benefits for the child are determined in this order: (a) first, the plan of the parent with custody of the child; (b) then, the plan of the spouse of the parent with custody of the child; (c) finally, the plan of the parent not having custody of the child; and (d) if the specific terms of a court decree state that one of the parents is responsible for the health care expenses of the child, and the entity obligated to pay or provide the benefits of the plan of that parent has actual knowledge of those terms, the benefits of that plan are determined first. This paragraph does not apply with respect to any claim determination period or plan year during which any benefits are actually paid or provided before the entity has that actual knowledge . . . .
Section 52.23(n) establishes rules governing which plan will pay first, where a dependent is covered under more than one plan. Generally, the order is determined by which parent’s birthday comes earlier in the year. An exception exists, however, where the parents are divorced or separated. Since the domestic partner and the other parent were not married, it logically follows that they cannot be “separated” or “divorced.” Therefore, the “birthday” rule of 11 NYCRR § 52.23(n)(3)(ii) governs. Please be advised, however, that the Insurance Department expresses no opinion as to what rule for coordination of benefits would apply in North Carolina, or under a policy subject to its laws.
For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.