DISTRICTS ‑- FIRE PROTECTION ‑- EMPLOYEES ‑- GROUP LIFE INSURANCE COVERAGE
Alternative procedures available for procurement of group life insurance for employees of a fire protection district under RCW 48.24.020 and RCW 52.08.030.
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January 31, 1973
Honorable Eric O. Anderson
State Representative, 19th District
Olympia, Washington 98504 Cite as: AGLO 1973 No. 17
This is written in response to your recent letter requesting our opinion on certain questions regarding the procurement of group life insurance for the employees of a fire protection district. As set forth in your letter, your questions are as follows:
1. Whether, under RCW 48.24.020 or other applicable statutes, the phrase "seventy-five percent of the then eligible employees" applies to each individual fire protection district electing to be insured under a master group policy, or to seventy-five percent of all employees of all of those fire districts electing to be so covered.
2. Whether RCW 52.08.030, where $10,000 is specified as a maximum amount of insurance, or RCW 48.24.060 (5), (dealing with public employees of municipal corporations,) wherein the maximum is specified as $5,000.00, is applicable as the limit of individual coverage under group life insurance policies for fire district employees.
We answer these questions in the manner set forth in our analysis.
The statutes giving rise to your questions read, in material part, as follows:
[[Orig. Op. Page 2]]
"The lives of a group of individuals may be insured under a policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustee is deemed the policyholder, insuring employees of the employer for the benefit of persons other than the employer, subject to the following requirements:
". . .
". . . A policy on which part of the premium is to be derived from funds contributed by the insured employees may be placed in force only if at least seventy-five percent of the then eligible employees, . . . elect to make the required contributions. . . ."
"The lives of a group of public employees may be insured under a policy issued to the departmental head or to a trustee, or issued to an association of public employees formed for purposes other than obtaining insurance and having, when the policy is placed in force, a membership in the classes eligible for insurance of not less than seventy-five percent of the number of employees eligible for membership in such classes, which department head or trustee or association shall be deemed the policyholder, to insure such employees for the benefit of persons other than the policyholder or any of its officials, subject to the following requirements:
". . .
"(2) . . . No policy may be placed in force unless and until at least seventy-five percent of the then eligible employees or association members, . . . have elected to be covered and have authorized their employer to make any required deductions from salary.
". . .
"(5) The amounts of insurance under the policy [[Orig. Op. Page 3]] must be based upon some plan precluding individual selection either by the employees or members or by the association. Such amountsshall in no event exceed five thousand dollars of life insurance in the case of any employee or member, and the amount of life insurance shall not exceed one thousand five hundred dollars in the case of retired employees or members and persons over age sixty-five." (Emphasis supplied.)
"Any fire protection district organized under this act . . .
". . .
"(8) May enter into contract to provide group life insurance for the benefit of the personnel of the fire districts, but not to exceed ten thousand dollars coverage per covered employee, and not more than fifty percent of the cost of such insurance shall be borne by the employer fire district." (Emphasis supplied.)
It is to be noted, first, in considering your questions that the first two of these three statutes are a part of the state insurance code and serve the function of defining the conditions under which group life insurance policies may be issued by insurers doing business in this state covering (1) the lives of employees of a specific employer (RCW 48.24.020); or (2) the lives of a designated group of public employees of one or more public employers (RCW 48.24.060). On the other hand RCW 52.08.030 (8), supra, is a part of the laws governing fire protection districts and serves the function of granting to such districts the requisite authority to contract for a group life insurance on behalf of their employees and to pay a portion of the premiums thereon.1/
[[Orig. Op. Page 4]]
In an opinion dated January 4, 1968, to the state insurance commissioner, copy enclosed, we advised that a life insurance policy may be written to cover a group of public employees under either RCW 48.24.020 or RCW 48.24.060; in other words, that the existence of this second statute specifically providing for the insurance of public employee groups does not exclude such groups from utilizing the first statute instead where all the requirements thereof can be met. Our task in answering your questions thus becomes essentially that of describing the differences between these two approaches and thereby indicating what requirements as to (1) percentage of employee participation and (2) maximum coverage will have to be met under each of them.
Under RCW 48.24.020,supra, a group life insurance policy may only be issued to an individual employer (such as an individual fire protection district exercising the authority granted by RCW 52.08.030 (8)) under a plan whereby the covered employees are to pay a part of the premium (as required by this last-cited statute) if seventy-five percent of the eligible employees of that employer (e.g., fire protection district) elect to participate. Conversely, if the employees of the district are members of an association formed for purposes other than the procurement of insurance, these employees through their association may procure a group life insurance policy under RCW 48.24.060, in which case the seventy-five percent participation factor will relate to the eligible members of the association rather than to the number of employees of a particular employer who are participating.2/ In addition, in order for the association itself to be authorized to become the holder of the group life policy covering these public employees ‑ it will have to have ". . . a membership in the classes eligible for insurance of not less than seventy-five percent of the number of employees eligible for insurance in such classes, . . .".
If RCW 48.24.020 is utilized by an individual fire protection district exercising its authority under RCW 52.08.030 (8), the dollar limit on coverage per covered employee will be $10,000 since RCW 48.24.020 contains no limitation, thereby leaving this issue to be determined by the terms of the statute (here, RCW 52.08.030 (8)) under which the district is acting. But if, instead, the policy is issued to a public employees' association or to a department head or trustee under RCW 48.24.060, the maximum coverage per covered employee will be $5,000, regardless of the higher maximum contained in [[Orig. Op. Page 5]] RCW 52.08.030 (8), because subsection (5) of the former statute expressly so provides where this statute is utilized.
Over and above the foregoing two approaches, however, there is a third possibility, not referred to in your letter, which seems worthy of note in order to complete the picture. Under another section of chapter 48.24 [[chapter 48.24 RCW]]of the insurance code, RCW 48.24.070,
"The lives of a group of individuals may be insured under a policy issued to the trustees of a fund established by two or more employers in the same industry, . . ."
Under this statute two or more fire protection districts could join together (pursuant to chapter 39.34 RCW) to form a trust fund for the purpose of jointly exercising the authority granted by RCW 52.08.030 (8), in which case the percentage of required employee participation would be governed by this statute instead of RCW 48.24.020, supra. Specifically, subsection (1) of RCW 48.24.070 provides that:
"(1) If the policy is issued to two or more employer members of an employers' association, such policy may be issued only if (a) the association has been in existence for at least five years and was formed for purposes other than obtaining insurance and (b) the participating employers, meaning such employer members whose employees are to be insured, constitute at date of issue at least fifty percent of the total employers eligible to participate, unless the number of persons covered at date of issue exceeds six hundred, in which event such participating employers must constitute at least twenty-five percent of such total employers in either case omitting from consideration any employer whose employees are already covered for group life insurance."3/
[[Orig. Op. Page 6]]
If you have any specific questions regarding this approach, not mentioned in your initial request, please advise.
We trust the foregoing will be of assistance to you.
Very truly yours,
Philip H. Austin
Deputy Attorney General
*** FOOTNOTES ***
1/See, AGO 61-62 No. 18 [[to Ray E. Munson, Prosecuting Attorney, Yakima County on March 21, 1961]], copy enclosed, which preceded the enactment of this statute and held that without such specific authority the commissioners of a fire protection district could not contract for such group life insurance.
2/RCW 48.24.060 also provides for the issuance of group life policies to a department head or trustee, and here the seventy-five percent participation factor is related to the total group eligible for coverage under the particular plan.
3/In addition, subsection (4) states that
"The policy must cover at least fifty persons at date of issue."
As for the maximum amount of coverage per employee, this would be governed by RCW 52.08.030 (8),supra (i.e., $10,000) because of the absence of any dollar limit in RCW 48.24.070.