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Many New Jersey employers who sponsor employee health-care plans face an uncertain, and potentially costly, situation as a result of the recently enacted New Jersey Domestic Partnership Act. The situation arises because it is not certain that the act does not require insured health-care plans to provide same sex “domestic partners” with continued health-care coverage under the plan in circumstances when coverage under the plan normally would end (e.g., a termination of an employee’s employment). The New Jersey Domestic Partnership Act, N.J.S.A. 26:8A-1 et seq., extends a variety of previously unavailable benefits, protections, and rights to domestic partners. In terms of health care, domestic partners are provided with hospital visitation rights, and the authority to “make medical or legal decisions for an incapacitated partner.” N.J.S.A. 26:8A-2(d). When a private employer in New Jersey purchases an insurance policy as the vehicle to provide health-care benefits to its employees under a group health-care plan, the DPA effectively requires that the employer provide its employees with the option of obtaining dependent coverage for same sex domestic partners. This is consistent with the DPA’s stated goal to make available, “at least in some cases, health � benefits that are provided in the same manner as for spouses.” N.J.S.A. 26:8A-2(c). The act does not directly impose upon any private employer the requirement that it provide health-care coverage to domestic partners as dependents of an employee covered by the group plan; to the contrary, the act expressly states that employers are not required to provide such coverage. DPA �57(b). Further, the act states that it is not unlawful discrimination in violation of the NJLAD for an employer not to provide dependent health-care coverage to a domestic partner. DPA �57(c). Despite the foregoing provisions, the act indirectly accomplishes its goal of insuring dependent health-care coverage for some domestic partners by mandating that every individual and group health insurance contract (including HMO and dental insurance contracts) that “provides hospital or medical expense benefits and is delivered, issued, executed or renewed in this State � . on or after the effective date of [the act], under which dependent coverage is available, shall offer dependent coverage to a covered person for a covered person’s domestic partner.” DPA ��51-54 (emphasis supplied). As a result, those employers who provide health-care coverage through an insurance policy are effectively forced to provide dependent coverage to domestic partners because in New Jersey, they cannot purchase an insurance policy that does not contain that coverage. In automobile sale parlance, in New Jersey, dependent coverage for domestic partners now is “standard,” not an “option,” in health-care insurance policies. Employers who do not provide health-care coverage through an insurance policy, i.e., who are self-insured, can decide not to provide dependent coverage to domestic partners because, as noted, the DPA expressly allows employers — as opposed to insurers writing health-care policies — to decline to provide such coverage. The explanation for the difference in treatment between “insured” and “uninsured” (or employer self-funded) employer group health-care plans is found in the Employee Retirement Income Security Act of 1974. 29 U.S.C. �1001 et seq. ERISA allows states to regulate the insurance industry, including the content of policies offered to employers to insure their health-care plans, but prohibits the direct regulation of most group health-care plans. See generally 29 U.S.C. �1144; Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S. 724, 747 (1985) (Court upholding, as against an ERISA pre-emption argument, a state law mandating that insurance policies issued in Massachusetts include certain benefits, and acknowledging that its decision “results in a distinction between insured and uninsured plans, leaving the former open to indirect regulation [by state] while the latter are not.”). This dichotomy, and its implication for application of the DPA, is discussed further, below. In 1986, Congress enacted the Consolidated Omnibus Budget Reconciliation Act, an amendment to ERISA. 29 U.S.C. �1161 et seq. COBRA requires that certain employees and their dependents (including spouses), called “qualified beneficiaries,” who would otherwise lose coverage under a group health-care plan due to a “qualifying event” be provided with the opportunity to temporarily continue — for up to 36 months — their group health-care coverage at group rates. 29 U.S.C. �1161(a). Under COBRA, a qualifying event may include: (1) the death of a COBRA-covered employee; (2) the termination or reduction of hours of the covered employee’s employment; (3) the divorce or legal separation of the covered employee from the employee’s spouse; (4) an employee’s entitlement to Medicare benefits; (5) the change in dependent status of a dependent child; or (6) the initiation of bankruptcy proceedings. 29 U.S.C. �1163. Pursuant to COBRA �1167(3)(A), a qualified beneficiary includes a “spouse” of a covered employee. COBRA does not address whether a domestic partner is considered a “spouse” (or other dependent) for the purpose of continuation coverage entitlement under COBRA. Another federal law, however, provides a definitive answer. The federal Defense of Marriage Act, 1 U.S.C. �7, states that its provisions apply: “In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the Unites States. � ” The DMA defines “ marriage” as “only a legal union between one man and one woman as husband and wife.” 1 U.S.C. �7. Further, that law defines “spouse” as referring “only to a person of the opposite sex who is a husband or a wife.” Id. Application of the federal DMA definition of “spouse” to COBRA’s definition of “qualified beneficiary” clearly excludes from that phrase a domestic partner, whether the partners are of the same sex or not. Thus, domestic partners are not entitled, under COBRA, to continue their health-care coverage under a group health-care plan upon the occurrence of a qualifying event. Since domestic partners do not have COBRA continuation coverage rights, it is important that employers sponsoring group health-care plans not suggest otherwise in any of the notices required under the new COBRA Notice Regulations, or in the plan’s summary plan description (SPD) required by ERISA to be published. 29 U.S.C. �1021(a). The required contents of an SPD are described at 29 U.S.C. �1022 and 29 C.F.R. Part 2520, Subpart B. Incorrectly describing the plan’s obligations under COBRA could result in unintended adoption of liability on the part of the plan and plan sponsor (the employer) to provide continuation coverage. In addition, the employer-plan sponsor should ensure that its COBRA administrator (whether it administers COBRA coverage in-house, or contracts out that function to a third-party administrator) not provide notices suggesting that COBRA coverage is available to domestic partners. The need for employers to act to avoid unintended liability is particularly important when one recalls that the DPA does not require employers to provide domestic partners with dependent health-care coverage; by its terms, the mandate imposed by the DPA runs only against the insurer of an employer’s plan. An employer providing health-care coverage through an insurance policy also should consult with its insurance broker to make certain that the insurer providing the health benefits policy is aware that COBRA continuation coverage is not required as a matter of federal law; otherwise, the employer might be paying a higher premium than should be the case. Simply because domestic partners do not have the right to continue their group health plan coverage as a matter of federal law (COBRA) does not, however, end the analysis. As previously noted, the DPA states that if an insurer in New Jersey issues a policy under which dependent coverage is available, that coverage must be offered under the policy to a domestic partner as a “dependent.” An insurer seeking to provide its employer-customer with a health-care policy whose terms satisfy COBRA will draft its insurance policy to make coverage “available” to COBRA-qualified beneficiaries — that is, qualified spouses and other dependents — upon the occurrence of a COBRA qualifying event. The question arises as to whether the fact that such dependent coverage is made “available” to qualified beneficiaries solely to comply with federal law activates the requirement, found in the DPA, that COBRA-mandated dependent coverage also must be made available to a domestic partner, under the same terms and conditions applicable to a dependant who is a “qualified beneficiary” pursuant to COBRA, even if that coverage is provided by virtue of state insurance law (through the DPA), and is not COBRA-mandated coverage. To state the issue more succinctly, is it the intent of the DPA to require insured health-care plans to provide coverage that “mirrors” COBRA continuation coverage, but is not COBRA coverage? The text of the DPA does not state that it is intended to apply in the case of COBRA continuation coverage. Nevertheless, whether the DPA will be interpreted in the future to implicitly compel such a result, even when another federal law (the DMA) clearly intends to exclude domestic partners from the benefits of COBRA, presently has no definitive answer. Proponents of domestic partner continuation coverage may argue that it is the intent of the DPA to insure that, whenever “dependents” are eligible for coverage under an insurance policy, domestic partners must be afforded the identical opportunity for coverage. The proponents of domestic partner coverage can point to the fact that ERISA (of which COBRA is a part) does not appear to pre-empt such a result, because the DPA accomplishes its goal by regulating insurance, which ERISA permits. By contrast, those who may argue that domestic partners should not be eligible for continuation coverage to the same extent that a “dependent” is eligible for such under COBRA may argue, first, that it would be incongruous to use the mandate of a federal statute (COBRA) that clearly does not provide for domestic partner continuation coverage, as the basis for requiring such under state law. As noted, nothing in the text of the DPA expressly provides for such a result. To the contrary, the DPA’s dependent coverage provision presupposes a purely voluntary decision by an employer to purchase an insurance policy that offers dependent coverage, not the required provision by a plan sponsor of federally mandated continuation coverage. Further, the DPA addresses coverage available to the category of “dependents,” not to the special category of individuals created by federal law known as “qualified beneficiaries.” Indeed, the latter classification cannot simply be equated to the category of “dependent,” because the class of qualified beneficiaries is both over and under-inclusive of the class of “dependents.” (i.e., one can be a qualified beneficiary without being a dependent, and vice versa). Furthermore, opponents of domestic partner continuation coverage may persuasively argue that allowing such coverage by setting up “mirror” COBRA coverage for domestic partners would effectively undermine another federal law (the DMA), clearly contravening congressional intent as expressed in that statute and as applied to COBRA, raising the issue of whether that aspect of the DPA conflicts with, and is pre-empted by, federal law. Effectively imposing COBRA continuation coverage for domestic partners upon insured plans, through the application of state law, would mean that all of the detailed COBRA rules regulating the scope of COBRA coverage would be imposed upon plans with respect to coverage afforded domestic partners, adding a significant administrative burden upon employers. Both the existence, if any, and scope of domestic partner “continuation coverage” is an issue whose definitive resolution, unfortunately, must await future guidance from the courts. Kevin C. Donovan is a labor and employment law partner with Wilson, Elser, Moskowitz, Edelman & Dicker of Newark. The author thanks Jennifer Schoenberg, a Seton Hall Law School student, for her assistance with this article.

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