The office of General Counsel issued the following informal opinion on August 20, 2002 representing the position of the New York State Insurance Department.
Re: Termination of Health Insurance Policy
Issue:
May an insured retain a New York health insurance contract after the insured moves to another state?
Conclusion:
If an insured relocates to another state, the insurer presently providing the health insurance may opt to terminate the contract.
Facts:
The insured is a sole proprietor engaged in the provision of financial advice and planning. The insured purchased a health insurance contract from Group Health Incorporated (GHI). The GHI contract has financial incentives that encourages one to utilize health providers within GHIs Preferred Provider Organization, although one can opt to consult a provider outside of the network. Because most of the insureds client contact does not require him to remain in the office, he has increasingly been spending more time in a distant state. The insured inquired whether, if he relocates from New York, he may retain his present health insurance contract.
Analysis:
The insurer, GHI, is a Health Service Corporation licensed by this Department pursuant to New York Insurance Law Article 43 (McKinney 2000). New York Insurance Law § 4304(c) (McKinney 2000) provides:
Any such contract may be terminated in the following manner: (1) At the option of the individual to whom the contract is issued, upon not less than one month's prior written notice. (2) At the option of the corporation, for one or more of the following reasons: . . . (D) In the case of a corporation that offers health insurance in the market through a network plan, the individual no longer resides, lives or works in the service area (or in an area for which the corporation is authorized to do business) but only if such coverage is terminated under this paragraph uniformly without regard to any health status-related factor of covered individuals. For the purposes of this subparagraph, the term "network plan" means health insurance coverage of a corporation organized under this article under which the financing and delivery of health care (including items and services paid for as such care) are provided, in whole or in part, through a defined set of providers under contract either with the corporation or another entity that has contracted with the corporation. . . .
It is the position of this Department that, since the grounds set forth in New York Insurance Law § 4304(c)(2) are permissive and not mandatory, if an insurer has not reserved in the contract the right to terminate because an insured has left the service area, it may not now utilize that ground. Accordingly, if GHI has set forth in the contract that leaving its service area is a ground for termination, and the insured should relocate outside of New York, and GHI becomes aware of such relocation, GHI would have the right to terminate the contract.
For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.