State Laws regarding domestic partners in Georgia, Maryland, New Jersey and Arizona

[Mary C]

I need some help before I go blind from trying to read state regs on line. We currently offer benefits to same gender domestic partners in the above states. One of our carriers has written our coverage to include coverage not only for same gender but also for opposite gender domestic partners in the states of Georgia, Maryland, New Jersey and Arizona. The carrier has stated that it is a state requirement that if we cover same gender domestic partners, we need to cover opposite gender domestic partners in those states, too.

I am having trouble finding that requirement and wonder if anyone more familiar with regulations in those states can point me in the right direction.

[Don Levit]

Mary:

It is my personal belief (which is fairly radical) that this particular provision is ultimately to be determined by the plan sponsor.

The state laws may have these mandates written into the various insurance codes, due to legislation passed by the states.

However, this particular provision is not one of the 4 federal mandates that I am aware of.

Thus, although the state insurers may have to offer the provision, the plan sponsor does not have to provide for coverage for opposite gender domestic partners (or same sex domestic partners). It is the plan sponsor's ultimate call.

Don Levit

[Mary C]

While I agree with you Don, I am being told that the carrier needs to file the plan with the state insurance commission and it needs to meet all state criteria before they can be licensed to sell that product in the state. That's why I'm asking for cites - our contract lawyer wants to review before accepting the carrier's word for it.

[Don Levit]

Mary:

I understand the predicament the insurer could have in filing a plan without some of the mandated benefits.

I have spoken with several state departments of insurance, and they all give the answer that they would not approve a plan without the mandates.

There are several states that also have 2 types of mandate provisions.

The first is what we are discussing: mandated benefits.

The second is known as mandated offerings.

Here, the insurer must offer the benefits, but the plan sponsor could refuse some or all of the "mandated offerings."

Other than the 4 federally mandated benefits, all mandates are "mandated offerings," in my opinion.

I have found the state departments of insurance regulators to know a lot about state regulations. Unfortunately, their knowledge of federal regulations is inadequate, in my opinion.

Even more alarming, is their apparent disregard and even disdain for federal regulations. Any apparent conflict or confusion is resolved in favor of state laws, as if the federal laws didn't even exist.

Do you have any solutions for hubris?

Don Levit

[QDROphile]

While you may disagree with what should be mandated, federal law allows the states to regulate insurance. So if you want third party insurance coverage, you are stuck with what the state requires in the policies, according to their own state mandates. If you want to be self insured, you can limit coverage to what the feds require.

I think it is wrong to impugn state regulators for "disdain" of federal standards when federal law expressly allows states to set different standards. You can impugn them for all sort of other reasons and I won't quarrel.

[Don Levit]

You are correct in the general statement that states can regulate insurance.

But, as you are probably aware, all generalizations are false.

There is an interesting body of law known as ERISA.

From that has evolved many federal court cases regarding preemption of state laws regarding ERISA plans.

For example, the Suppreme Court ruled in Shaw v. Delta Air Lines in 1983 and FMC Corp. v. Holliday in 1990, that state laws that prescribe specific benefits that an employee benefit plan must afford are preempted.

As I recall, an ERISA employee benefit plan can be self insured or fully insured.

Therefore, state laws that attempt to structure ERISA plans (however they are funded) are preempted.

Now, this of course is my opinion, based on 2 Supreme Court cases.

Am I right? Well, I think there is enough conflict and confusion betweeen state and federal legislation, such that state regulators should study the matter a lot closer; certainly a lot closer than the federal government allows us to regulate insurance any way we want.

Don Levit

[QDROphile]

Can you provide an example of court decision that disputes the ability of a state to determine terms of an insurance policy issued in the state? I would expect the case to involve ERISA section 514(b)(2). There are cases that question whether or not a law regulates insurance. But terms of insurance policies are set under laws that regulate insurance.

I think you will find that plans may not be regulated, but policies are. So If you want to provide plan benefits through an insurance policy, you are stuck with the terms of the policy, which is within the authority of the states. If you are self-insured, then you can exercise control over the plan benefits without regard to state mandates.

[Don Levit]

When you say that plans may not be regulated, but policies can, I agree with you!

The insurance companies are stuck with the terms of the policy, not the plan sponsor. And, this would apply, regardless of whether the plan sponsor of an ERISA plan is self insured or fully insured.

There has not been a federal case, to my knowledge, in which the state attempted to compel a plan sponsor to structure the plan in a particular way.

There have been federal cases, including the Supreme Ct. case of Metropolitan v. Travelers, in which the state could compel the insurer to offer the benefits.

The case did not go into whether a particular plan sponsor had to accept the benefits.

Can you cite a federal case in which this was so?

Don Levit

[QDROphile]

If a plan wishes to provide benefits through an insurance policy, there is no point arguing about what a plan could/should/must provide. The terms of the policy will determine the mimimum benefits (the plan can provide for more than the insured benefits, but not less). Mary C is questioning insurance policy terms and wants to find the source in state law that compels the insurance company to include certain benefits in the policy.

[Guest georgia]

I would imagine a telephone call to the insurance commissioners office in the affected states should answer the question about that state's law and also offer the legal cite in the state code.

[Steve72]

Hasn't this already been argued?

(EDIT: Yes, it has. HERE.)

Don, no insurance company is going to sell an illegal product, regardless of whether the plan sponsor would be free to offer it.

[Guest georgia]

Mary C - this thread seems to have revived an old battle that doesn't respond to your original question.

In response to your original question about the various state laws, specifically in Georgia, as a CEBS in the employ of the State of Georgia in an employee benefits function more than 10 years now, I think your carrier is incorrect regarding Georgia state law. The Official Code of Georgia section 50-1-8 passed in the 2005 legislative session deals with domestic partner benefits and is the only law I'm aware of that does. But I don't profess to know everything about everything. Your goal seems to be not to be more generous than the laws require, and that's why I suggested you touch base with the Insurance Commissioner's Office. At least in Georgia, I find they go out of their way to be helpful whenever I've called on them.

The General Assembly has not yet updated their web site following the session but the text of 50-1-8 can be found here: http://www.legis.state.ga.us/legis/2005_06/sum/hb67.htm

[Don Levit]

Steve:

Well, I guess that ends the discussion, since you mentioned the word "illegal."

My contention is that insurers and departments of insurance have a lot more flexibility than just deciding betwwen legal and illegal.

More innovative, affordable, and permanent products can be introduced by insurers, in my opinion.

It is not that I am convinced of the legality of these options.

It is that I am convinced of the confusion of the various regulations.

This confusion opens up the opportunity of experimenting with different products.

If the insurers and departments of insurance CHOOSE to not pursue this path, I certainly respect their decisions. The fact that action is not being taken, is a choice, not because new laws must be passed.

Don Levit