OGC Op. No. 03-01-01

The Office of General Counsel issued the following opinion on January 2, 2003, representing the position of the New York State Insurance Department.

Re: Health Insurance, Creditable Coverage

Question Presented:

May an individual take advantage of the continuation coverage provided under the Comprehensive Omnibus Budget Reconciliation Act of 1986 (COBRA) for a short period of time in order to bridge the gap between losing coverage as a dependent because of a divorce and then becoming eligible for coverage as a dependent of a new spouse?


Yes, such an act is permissible.


Since this was a general inquiry, no facts were provided.


New York Insurance Law § 3232 (McKinney 2000) provides:

Every . . . group or blanket accident and health insurance policy issued or issued for delivery in this state which includes a pre-existing condition provision shall contain in substance the following provision or provisions which in the opinion of the superintendent are more favorable to the individuals, members of the group and their eligible dependents: (a) In determining whether a pre-existing condition provision applies to a covered person, the group or blanket accident and health insurance policy . . . shall credit the time the covered person was previously covered under creditable coverage, if the previous creditable coverage was continuous to a date not more than sixty-three days prior to the enrollment date of the new coverage. In the case of previous health maintenance organization coverage, any affiliation period prior to that previous coverage becoming effective shall also be credited pursuant to this subsection.

. . .

(c) For purposes of this section ‘creditable coverage’ means, with respect to an individual, coverage of the individual under any of the following: (1) A group health plan; (2) Health insurance coverage . . . .

COBRA, Pub. L. No. 99-272 requires that group health plans provide continuation coverage upon the occurrence of specified qualifying events. This requirement has been codified as part of the Employee Retirement Income Security Act (ERISA) at 29 U.S.C.A. §1161 et seq. (West 2000).

The required continuation coverage is specified in 29 U.S.C.A. §1162, which provides in pertinent part:

The term ‘continuation coverage’ means coverage under the plan which meets the following requirements: (1) Type of benefit coverage. The coverage must consist of coverage which, as of the time the coverage is being provided, is identical to the coverage provided under the plan to similarly situated beneficiaries under the plan with respect to whom a qualifying event has not occurred. . . .

(2) Period of Coverage. The coverage must extend for at least the period beginning on the date of the qualifying event and ending not earlier than . . . the date which is 18 months after the date of the qualifying event. . . . (C) The payment of any premium . . . shall be considered to be timely if made within 30 days after the date due or within such longer period as applies to or under the plan.

(3) Premium requirements. The plan may require payment of a premium for any period of continuation coverage, except that such premium--(A) shall not exceed 102 percent of the applicable premium for such period, and (B) may, at the election of the payor, be made in monthly installments.

While 29 U.S.C.A. § 1163 lists a number of "qualifying events," the one that is applicable to the situation postulated is set forth in 29 U.S.C.A. § 1163(3): "[t]he divorce or legal separation of the covered employee from the employee's spouse."

While ERISA covers most employee welfare benefit plans, as defined in 29 U.S.C.A. § 1002(1) (West 2000), there are some plans, primarily church and governmental plans, 29 U.S.C.A. § 1003(b) (West 2000), that are excluded from ERISA, and thus COBRA. For those non-ERISA plans New York Insurance Law §§ 3221(m) (McKinney 2000 and 2003 Supp.), dealing with policies issued by commercial insurers, and 4305(e) (McKinney 2000 and 2003 Supplement), dealing with contracts issued by not-for-profit Health Service Corporations and all Health Maintenance Organizations, impose a similar continuation requirement.

Continuation coverage under either COBRA or the New York Insurance Law would constitute creditable coverage within the meaning of New York Insurance Law § 3232. Accordingly, if there is creditable coverage, the insurer could not impose a waiting period for a pre-existing condition. There is no requirement that an individual maintain such continuation coverage for the full period allowed under either COBRA or the New York Insurance Law. Accordingly, continuation coverage could be maintained for a period of slightly more than a month.

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