Opinion 97 - 2
INSURANCE -- Health Insurance (authority to cover former school board members); (municipal cooperative health benefit plans) -- Self-Insurance (municipal cooperative health benefit plans)
MUNICIPAL COOPERATION -- Insurance (municipal cooperative health benefit plans)
SCHOOL DISTRICTS -- Powers and Duties (authority to provide health insurance coverage for former school board members)
INSURANCE LAW, ARTICLE 47; GENERAL MUNICIPAL LAW, §§92-a, 119-o: A school district may not reimburse a former school board member who participates in a municipal cooperative health benefit plan for Part B Medicare premiums paid by the former school board member. 1985 Opns St Comp No. 85-3, p 3, superseded to the extent inconsistent.
You ask whether a school district may reimburse a former school board member who participates in the school district's local health insurance plan for Part B Medicare insurance premiums paid by the former school board member.
We have been informed that the school district participates in a municipal cooperative "self-insured" health benefit plan established pursuant to sections 92-a and 119-o of the General Municipal Law, and governed by article 47 of the Insurance Law. The plan provides that when a former school board member becomes eligible to purchase Part B Medicare insurance, he or she loses coverage for amounts that would otherwise be paid by the Part B Medicare insurance. We have also been informed, however, that when a former school board member becomes eligible to purchase Part B Medicare insurance, there is no change in the plan's premium equivalent rate for that person. Instead, any reduction in the cost to the plan of insuring former board members who become eligible to purchase Part B Medicare insurance is taken into consideration when premium equivalent rates are set for the plan as a whole.
General Municipal Law, §119-o authorizes municipal corporations, including school districts (General Municipal Law, §119-n), to enter into cooperation agreements for the performance among themselves or one for the other of their respective functions, powers and duties on a cooperative or contract basis. Fundamentally, a municipal corporation may participate in cooperation agreements only for the performance of those functions which it is empowered to perform individually (see, e.g., 1996 Opns St Comp No. 96-19, p 41).
Municipal corporations are authorized to provide a medical, surgical and hospital insurance plan for their officers and employees, and "retired officers and employees", and their families pursuant to General Municipal Law, §92-a. The power to purchase insurance for health care benefits pursuant to General Municipal Law, §92-a has been held to imply the power to "self-insure" for that purpose (Rice v Cayuga-Onondaga Healthcare Plan, 190 AD2d 330, 599 NYS2d 344; 1982 Opns St Comp No. 82-197, p 250). Thus, pursuant to General Municipal Law, §§92-a and 119-o, municipal corporations, including school districts, may enter into agreements for the provision of a cooperative "self-insured" health care benefits plan (id.).
Article 47 of the Insurance Law (§4701 et seq., added L 1994, ch 689) generally provides, among other things, for the regulation and certification by the State Superintendent of Insurance of "shared funding" municipal cooperative health benefit plans established or maintained pursuant to a municipal cooperation agreement authorized by article 5-G of the General Municipal Law (see Insurance Law, §4702[d], [e]). It appears that premium equivalent rates under these plans must be established on the basis of a "community rating" methodology (see Insurance Law, §4705[d][B]), that is, "a rating methodology in which the premium equivalent rate for all persons covered under a . . . plan is the same, based upon the entire pool of risks covered under the plan, without regard to age, sex, health status or occupation and such that refunds, rebates, credits or dividends based on age, sex, health status or occupation are not permitted" (Insurance Law, §4702[a]).
Section 92-a generally authorizes a public corporation to pay all or a portion of the cost of health benefit plans for its officers, employees and retirees. Subdivision 1-a of section 92-a, however, provides that:
Thus, a school district may permit former school board members with at least 20 years of service in such position to participate in a local health insurance plan under section 92-a, but only if the "total cost of participation" is borne by the former board members(1).
Although section 92-a does not expressly authorize reimbursement to officers, employees or retirees for the cost of Part B Medicare insurance, in several prior opinions we concluded that where a public corporation pays all or a portion of the cost of health insurance under a local plan, it has implied authority under section 92-a to provide reimbursement for Medicare premiums (see 33 Opns St Comp, 1977, p 68; 1972 Opns St Comp No. 72-956, unreported; cf. Civil Service Law, §167-a, pertaining to reimbursement of Medicare premiums under the State health insurance plan). As noted, however, section 92-a requires former school board members to pay the "total cost of participation" in a local health insurance plan. Thus, in our view, section 92-a necessarily implies that school districts lack authority to pay any portion of the cost of providing health insurance or benefits to former school board members participating in local health benefits plans.
In this instance, the community rating methodology appears to result in former school board members not receiving a premium equivalent rate reduction upon becoming eligible for Part B Medicare insurance and, instead, causes any savings to be used to reduce the premium equivalent rate of all the participants in the plan(2). Nevertheless, reimbursing former board members for their Part B Medicare premiums, in our opinion, would be tantamount to the school district funding part of the cost of providing health care benefits to the former board members in contravention of the mandatory provisions of section 92-a(1-a).
Accordingly, it is our opinion that a school district may not reimburse a former school board member who participates in a municipal cooperative health benefit plan for Part B Medicare premiums paid by the former school board member.
February 11, 1997
1. In 1985 Opns St Comp No. 85-3, p 3, we construed the phrase "retired officers and employees" as used in section 92-a as not including former unsalaried school board members who in their capacity as board members are not members of, and are not eligible to receive a retirement allowance from, a public retirement system. Thus, we expressed the view that a school district lacked authority to permit such former board members to participate in the school district's local health insurance plan (id.). The opinion, however, pre-dated the addition of subdivision 1-a to section 92-a by L 1987, ch 505. Therefore, we hereby supersede Opn No. 85-3, supra to the extent inconsistent with General Municipal Law, §92-a(1-a).
2. Questions concerning premium equivalent rate structures under the community rating methodology should be addressed to the State Insurance Department.