Is a voluntary, employee-paid AFLAC plan a 'group insurance plan' a Florida city must extend to retirees?

Plain-English summary

The City of St. Petersburg offered employees a voluntary AFLAC supplemental policy: employees who wanted it paid 100 percent of the premium through pre-tax payroll deductions, and the city collected and forwarded the money and publicized the option but did not endorse the plan. The city attorney asked the Attorney General whether that AFLAC plan was a "group insurance plan" under section 112.0801, Florida Statutes, the law that requires public employers to let retirees keep participating in the agency's group insurance.

The Attorney General's office declined to answer the question directly. A Senior Assistant Attorney General explained that the office opines on questions of state law but cannot resolve "mixed questions of law and fact," and it had no authority to review the terms of a private company's insurance plan to decide how a state statute characterizes it.

The office did offer informal comments for general direction. It pointed out that "group insurance plan" is not defined in section 112.0801, but related law (the group health insurance definition in section 627.652 and general descriptions in legal encyclopedias) treats group insurance as covering a number of individuals under a single, comprehensive policy. From the facts described, the office observed that the city did not appear to be contracting with AFLAC to insure a group, but was acting more as an administrative agent making payments on employees' behalf. It suggested the city consult the Department of Management Services, which administers state group insurance and offers an AFLAC product to state employees.

Currency note

This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did the AG decide whether the AFLAC plan was "group insurance" under section 112.0801?
A: No. The office expressly declined, saying that characterizing a particular private insurance plan against the statute is a mixed question of law and fact outside its authority. The answer below is informal guidance, not a ruling.

Q: What does "group insurance plan" generally mean?
A: As the informal comments described it, group insurance covers a number of individuals under a single, comprehensive or blanket policy, which often lets the insurer charge lower premiums than individual policies. Section 627.652(1) defines "group health insurance" for its own part of the code as coverage of groups under a master policy.

Q: Why might the AFLAC arrangement not be a "group" plan?
A: On the facts the city described (employees paying the full premium through payroll deduction, the city not endorsing the plan), the office observed the city looked like an administrative agent forwarding payments rather than an entity contracting to insure a group. It did not make a final determination.

Q: Where could the city get a definitive answer?
A: The office suggested contacting the Department of Management Services, Division of State Group Insurance, which administers state insurance and had handled AFLAC products, since section 112.0801 applies to both state and local agencies.

Background and statutory framework

Section 112.08(2), Florida Statutes, lets local governments pay for life, health, accident, and similar insurance for their officers and employees. Section 112.0801 then requires any state agency or local government that provides such coverage "upon a group insurance plan or self-insurance plan" to let retirees and their dependents continue participating, generally at the same premium cost as active employees, with claims experience commingled for health coverage.

The term "group insurance plan" is not defined in section 112.0801, so the informal comments looked to analogous sources: Part VII of Chapter 627 (group, blanket, and franchise health insurance), which in section 627.652(1) defines "group health insurance" as coverage under a master policy issued to listed groups (employee groups, union and association groups, debtor groups, teacher and student groups, and others), and general definitions from Florida Jurisprudence and American Jurisprudence describing group insurance as coverage of many individuals under one policy. Because the office could not apply that framework to a specific private plan's facts, it confined itself to general direction.

Citations and references

Statutes:

• § 112.0801, Fla. Stat. (retiree continuation in agency group insurance or self-insurance plans)
• § 112.08(2), Fla. Stat. (local government authority to provide and pay for employee insurance)
• § 627.652(1), Fla. Stat., and §§ 627.653-627.656 (definition and categories of group health insurance)
• § 121.021(29), Fla. Stat. (normal retirement age and service, referenced in the retiree definition)

Secondary sources cited: 30A Fla. Jur. 2d Insurance s. 1806; 44A Am. Jur. 2d Insurance s. 1828.

Source

• Landing page: https://www.myfloridalegal.com/ag-opinions/public-officers-and-employees-group-insurance
• Original PDF: https://www.myfloridalegal.com/print/pdf/node/8183

Original opinion text

Mr. John C. Wolfe

City Attorney

Office of the City Attorney

City of St. Petersburg

Post Office Box 2842

St. Petersburg, Florida 33731-2842

Dear Mr. Wolfe:

As City Attorney for the City of St. Petersburg and on behalf of the Mayor of the City of St. Petersburg, you have asked for assistance in determining whether a voluntary AFLAC supplemental insurance plan offered to city employees would be a "group insurance plan" within the scope of section 112.0801, Florida Statutes. While this office is authorized to provide legal advice and opinions on questions of state law, we do not have the authority to resolve mixed questions of law and fact. Thus, this office has no authority to review the terms of an insurance plan offered by a private company to determine its characterization within the scope of a state statute. However, despite the limitations of our authority, I offer the following informal comments in an effort to provide you with some general direction on this issue.

Section 112.08(2), Florida Statutes, authorizes every local governmental unit, including municipalities, "to provide and pay out of its available funds for all or part of the premium for life, health, accident, hospitalization, legal expense, or annuity insurance, or all or any kinds of such insurance, for the officers and employees of the local governmental unit . . . and, to that end, to enter into contracts with insurance companies or professional administrators to provide such insurance."

Section 112.0801, Florida Statutes, provides for the participation of retired governmental employees in agency group insurance plans offered to current officers and employees, as follows:

"(1) Any state agency, county, municipality, special district, community college, or district school board which provides life, health, accident, hospitalization, or annuity insurance, or all of any kinds of such insurance, for its officers and employees and their dependents upon a group insurance plan or self-insurance plan shall allow all former personnel who have retired prior to October 1, 1987, as well as those who retire on or after such date, and their eligible dependents, the option of continuing to participate in such group insurance plan or self-insurance plan. Retirees and their eligible dependents shall be offered the same health and hospitalization insurance coverage as is offered to active employees at a premium cost of no more than the premium cost applicable to active employees. For the retired employees and their eligible dependents, the cost of any such continued participation in any type of plan or any of the cost thereof may be paid by the employer or by the retired employees. To determine health and hospitalization plan costs, the employer shall commingle the claims experience of the retiree group with the claims experience of the active employees; and, for other types of coverage, the employer may commingle the claims experience of the retiree group with the claims experience of active employees. Retirees covered under Medicare may be experience-rated separately from the retirees not covered by Medicare and from active employees, provided that the total premium does not exceed that of the active group and coverage is basically the same as for the active group.

(2) For purposes of this section, 'retiree' means any officer or employee who retires under a state retirement system or a state optional annuity or retirement program or is placed on disability retirement and who begins receiving retirement benefits immediately after retirement from employment. In addition to these requirements, any officer or employee who retires under the Public Employee Optional Retirement Program established under part II of chapter 121 shall be considered a 'retired officer or employee' or 'retiree' as used in this section if he or she:

(a) Meets the age and service requirements to qualify for normal retirement as set forth in s. 121.021(29); or

(b) Has attained the age specified by s. 72(t)(2)(A)(i) of the Internal Revenue Code and has 6 years of creditable service."

You have asked whether voluntary AFLAC supplemental insurance plan offered to city employees would be a "group insurance plan" subject to the requirements of section 112.0801, Florida Statutes. You have described the AFLAC plan as one in which the municipality offers the AFLAC insurance as part of the benefits package offered to employees, the portable AFLAC insurance policy would be paid 100% by the employee policy holder through pre-tax payroll deductions collected and remitted to AFLAC by the municipality, and the municipality would publicize the availability of the plans and facilitate communication between AFLAC and the municipality's employees but would not endorse the AFLAC insurance plan.

While the term "group insurance plan" is not defined for purposes of section 112.0801, Florida Statutes, various statutory sections dealing with insurance and other legal resources may provide some guidance. Part VII, Chapter 627, Florida Statutes, relating to group, blanket, and franchise health insurance policies, provides a definition of "group health insurance" for purposes of that part. Section 627.652(1), Florida Statutes, states that group health insurance is "that form of health insurance covering groups of persons under a master group health insurance policy issued to any one of the groups listed in ss. 627.653-627.656." The groups which may be covered include employee groups;[1] labor union, association, and small employer health alliance groups;[2] debtor groups;[3] teacher and student groups;[4] and other additional groups covered under section 627.656.

A more general definition of "group insurance" may be found in Florida Jurisprudence:

"Generally speaking, group insurance is the coverage of a number of individuals comprising a group, by means of a single or blanket policy, thereby effecting economies which frequently enable the insurer to sell its services at lower premium rates than are ordinarily obtainable for the same type of insurance protection on policies sold to individuals."[5]

American Jurisprudence also includes a general definition:

"Generally, group insurance is the coverage of a number of individuals by means of a single, comprehensive or blanket policy. A group insurance policy has been defined as a contract between an insurer and an entity for the benefit of a group of people that has some relationship to that entity. The policies may be issued to an employer, association, or other qualified group. This frequently enables the insurer to sell its services at lower premium rates than are ordinarily obtainable for the same type of insurance protection on policies sold to individuals. Group policies are generally construed as creating a contract of insurance between the employer and the insurer, but for the benefit of the insured employees. Group insurance is not indemnity insurance for the benefit of the employer, but insurance upon the life of the employee for his or her personal benefit and the protection of those depending upon the employee."[6]

Thus, it appears that a "group insurance plan" involves the coverage of a number of individuals by means of a single comprehensive policy. From the information you have submitted to this office, it does not appear that the municipality is contracting with AFLAC to insure a group, but is merely acting as an administrative agent for purposes of making payments on the employees’ behalf.

I would also note that the State of Florida offers AFLAC cancer/intensive care protection insurance for state employees as part of our health and benefits package. You may wish to consult with the Department of Management Services regarding any determination that agency has made regarding the nature of AFLAC policies under the terms of section 112.0801, Florida Statutes, as the statute clearly applies both to state and local governmental agencies. The Department of Management Services, Division of State Group Insurance, may be contacted by telephone, toll-free at 1-800-226-3734.

I trust that these informal comments may be helpful to you.

Sincerely,

Gerry Hammond

Senior Assistant Attorney General

GH/tsh

[1] Section 627.653, Fla. Stat.

[2] Section 627.654, Fla. Stat.

[3] Section 627.655, Fla. Stat.

[4] Section 627.6551, Fla. Stat.

[5] 30A Fla. Jur. 2d Insurance s. 1806.

[6] 44A Am. Jur. 2d Insurance s. 1828.