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AT THE OFFICE: New medical insurance laws not for self-insured

Question: Does the new insurance legislation just signed by New York Gov. David A. Paterson apply to self-insured companies? The laws extend the length of COBRA coverage and allow parents to carry their dependents on their company health-insuranc...

Question: Does the new insurance legislation just signed by New York Gov. David A. Paterson apply to self-insured companies? The laws extend the length of COBRA coverage and allow parents to carry their dependents on their company health-insurance plans until age 29. And can an employer be self-insured yet offer benefits through an insurance company?

Answer: The two laws, which the governor signed on July 29, do not apply to self-insured employers, so their employees wouldn't benefit, according to the New York Insurance Department. That's because the department doesn't have jurisdiction over self-insured plans, said Leigha Basini, a department associate insurance attorney. (They are regulated by the federal government.)

"A self-insured employer pays claims with its own funds and assumes its own risk," Basini said. "Usually very large employers and unions do this to access greater control over benefit design and cost, compared to more stringent requirements placed on fully insured plans by state insurance laws."

The new COBRA statute (named for the Consolidated Omnibus Budget Reconciliation Act) increases the period of coverage up to 36 months for workers who have lost health insurance benefits.

That's significant because the length of coverage used to depend on why the benefits were lost. And coverage under federal COBRA generally ends after 18 months, with some exceptions.

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Now, workers in the state who lose health insurance benefits can obtain COBRA coverage for up to 36 months. Even if the employees work for companies with 20 or more employees, the group that federal COBRA laws cover, they could be eligible for an extra 18 months of COBRA health insurance after their federal benefit ends. New York's COBRA laws, also known as "mini COBRA," primarily cover companies with fewer than 20 employees and apply, like the federal counterpart, to companies that offer health benefits.

Under COBRA employees have access to their former employer's group rates, but they have to foot the cost of the premium.

A separate insurance statute signed into law the same day concerns dependents and extended coverage. New York families can now keep their unmarried dependents on job-sponsored health insurance until the young adults turn 29.

Generally young adults age out of their parents' group health insurance policies when they turn 19 or when they leave high school or college. The families would have to pay for the extended coverage, but they would have access to their employers' group rates.

But neither law applies to self-insured companies.

Self-insured companies sometimes don't seem self-insured because the employees might receive cards from an insurance carrier. The relationship in that case is administrative.

"This is because usually a self-insured employer will pay a health insurance company or other entity to act as an administrator and adjudicate the claims," Basini said. "Also, the employer will pay to use the insurer's network of providers. Under these circumstances the plan is still self-funded, because the risk remains with the employer."

Q: Two weeks ago two compressors in the company air-conditioning system broke, and now our office of about 40 people is roughing it with fans. Our boss and the landlord are disputing who is going to pay for the repairs, and it looks like nothing will be done. What recourse do we have besides looking for a cooler place to work?

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A: As bad as things are with no air-conditioning, the agency that deals with working conditions, the U.S. Occupational Safety and Health Administration, doesn't act until a problem poses a health and safety concern.

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