New York group health continuation, extension of benefits, conversion, and small employer coverage (Ins. Law 3221; Reg 145)

When group health coverage ends in New York

An employee's group health coverage usually ends because something changes: the job ends, the employee drops out of the eligible class, or the employer's group policy itself terminates. New York law does not leave that person with nothing. The exam expects you to know the safety nets, in what order they apply, and the special New York rules for small employers.

Continuation: stay on the group plan

Continuation keeps the person on the same group policy, usually paying the full premium themselves.

• Federal COBRA applies to employers with 20 or more employees. It generally lasts 18 months after job loss or reduced hours, up to 29 months for a disabled beneficiary and 36 months for dependents after events such as the employee's death or divorce. The person can be charged up to 102% of the group rate.
• New York state continuation fills the gap for groups too small for COBRA and lets people whose federal COBRA runs out extend coverage, generally to a total of 36 months.

New York Insurance Law § 3221 makes continuation an alternative to conversion: the insured may choose to continue under the group policy and then, at the end of the continuation period, still receive an individual conversion policy. The conversion policy takes effect the day after continuation ends, so there is no gap.

A qualifying event that makes someone eligible for COBRA also makes them eligible to buy coverage through NY State of Health, the state marketplace, where they may qualify for financial help, Medicaid or Child Health Plus.

Conversion: trade group coverage for an individual policy

Conversion replaces group coverage with a policy issued to the person directly. Under § 3221(e), a group hospital, medical or surgical expense policy must give a conversion right when coverage ends because employment or membership in the eligible class ends, or because the group policy terminates for any reason, unless the employer replaced it with similar, continuous coverage.

Key conversion rules:

• No evidence of insurability is required.
• The person must apply within 60 days after termination and pay the premium, quarterly or less often at the person's option.
• If the person was not told about the conversion right in time, the deadline is extended to 45 days after notice is given. If notice is not given within 90 days after coverage ended, the right expires at the end of those 90 days.
• The insurer may provide the converted coverage under a group policy delivered in New York instead of an individual policy.
• The insurer need not issue a conversion policy to someone already covered for similar benefits by another plan.
• The insurer must offer a converted policy at each metal level of coverage that includes the essential health benefits package.

Continuation keeps you in the group. Conversion moves you out of it, onto a policy of your own.

Extension of benefits for the totally disabled

Separately from continuation and conversion, a person who is totally disabled when group coverage ends generally receives an extension of benefits for that disabling condition, typically for up to 12 months or until the disability ends. It covers the condition, not new illnesses, and costs the insured nothing.

Military reservists and the National Guard

New York adds supplementary continuation and conversion rights for insured members of a reserve component, including the National Guard, who are called to active duty. If the employer does not keep their coverage, they may continue it under the group policy and convert at the end. If they decline, coverage is suspended during active duty rather than lost.

Young adults through age 29

Most coverage ends for a child at 26. New York's "Age 29" law adds two routes:

• The young adult option: an eligible young adult may continue or obtain coverage through a parent's group policy through age 29, paying a premium of no more than 100% of the single premium rate. The young adult (or employee) elects it.
• The make-available option: insurers must offer to extend dependent coverage through age 29 if the policyholder asks. Under group coverage the employer decides; the young adult does not.

Small employer coverage

New York defines a small group as one to 100 employees (exclusive of spouses and dependents) for policies issued or renewed since January 1, 2016. Small group health coverage in New York must be:

• Community rated: one rate for everyone, not set by age, sex or health.
• Guaranteed issue: small groups must be accepted at all times throughout the year.
• Not cancellable for claims experience: once accepted, a small group cannot be terminated because of its claims.
• Essential health benefits: non-grandfathered small group and association policies must cover the essential health benefits package.

An insurer also may not sell stop-loss coverage to a small group that would otherwise be subject to these rules, which keeps small employers inside the community-rated pool.