Insurance and Disability Benefits: New Mexico
Federal law and guidance on this subject should be reviewed together with this section.
Author: Gloria Ju
- New Mexico employers are not required to provide life insurance benefits. If life insurance benefits are provided, certain requirements must be met. Group Life Insurance.
- If a New Mexico employer offers group life insurance, premiums for the policies may be paid from different sources. See Employer Contribution and Coverage Requirements.
- Employees are entitled to a minimum grace period for paying premiums, except the first. See Grace Period.
- Group life insurance policies may be converted to individual policies under some circumstances. See Conversion Rights.
- Group life insurance may continue for a limited time during an employee's total disability. See Continuation of Coverage.
Group Life Insurance
In New Mexico, employers are not required to provide employees with life insurance benefits. If an employer chooses to provide life insurance as a benefit, certain requirements apply.
Employer Contribution and Coverage Requirements
An employer's group life insurance policy must cover all of the employer's employees, or all of any class or classes of employees. A policy may, but is not required to, define eligible employees to include:
- Employees of subsidiary corporations;
- Employees, individual proprietors and partners of affiliated corporations, proprietorships or partnerships that are under common control with the employer;
- The individual proprietor or partners if the employer is an individual proprietorship or partnership;
- Retired employees and directors of a corporate employer; and
- Elected or appointed officials under a policy issued to insure the employees of a public body.
The premiums may be paid from any of the following:
- The employer's funds;
- Funds contributed by the insured employees; or
If employer funds pay the entire premium, then the policy must insure all eligible employees, except those who reject the coverage in writing or who cannot provide satisfactory evidence of individual insurability. +N.M. Stat. Ann. § 59A-21-4(B); +N.M. Stat. Ann. § 59A-21-4(C).
Group life insurance may be extended to an insured employee's dependents or any class or classes of dependents. Dependents include:
- Spouses; and
- Minor children (including children up to 25 years of age attending an educational institution).
Group life insurance policies must include a 31-day grace period for premium payments, except the first, during which the death benefit coverage will continue in force unless the policy-holder gives written, advance notice of discontinuance under the terms of the policy. +N.M. Stat. Ann. § 59A-21-12.
Once an insured individual has maintained a life insurance policy for two years, an insurer may only contest the policy for nonpayment of premiums. When contesting the validity of the insurance, the insurer is prohibited from using statements made by the insured relating to his or her insurability, unless the statement is in writing and signed by the insured. +N.M. Stat. Ann. § 59A-21-13.
Employees who lose eligibility for their employer's group life insurance policy must have the option to convert the policy to an individual life insurance policy. The employee will generally be entitled to conversion without evidence of insurability as long as the employee properly initiates the conversion.
An employee may lose eligibility due to termination of employment or termination of membership in the eligible class or classes. The employee may convert only the life insurance policy, not any disability or other supplementary benefits. The individual policy amount may not exceed the amount of the current group policy less the amount of any life insurance for which the employee is or becomes eligible under any group policy within 31 days of the termination of the current group policy. +N.M. Stat. Ann. § 59A-21-19.
Conversion rights are also available to:
- A surviving covered dependent who loses coverage because of a covered employee's death; and
- A covered dependent who loses coverage (while the covered employee remains insured) because he or she is no longer a qualified family member under the group policy.
An employee who loses coverage because the policy is terminated or amended is entitled to convert the group policy into an individual life insurance policy if the employee had the current group policy for at least five years. The amount of the individual policy may not exceed the lesser of:
- The amount of the current group policy less the amount of any life insurance for which the employee is or becomes eligible under any group policy within 31 days of the termination of the current group policy; or
If a covered employee dies during the period the employee was entitled to convert to an individual policy and before the individual policy becomes effective, the amount of life insurance to which the employee would have been entitled to have issued to him or her is payable as a claim under the group policy. The claim is payable regardless of whether or not the employee applied for the individual policy or paid the first premium. +N.M. Stat. Ann. § 59A-21-21.
Notice of Conversion Rights
At least 15 days before the conversion period expires, an insurer must notify each covered individual of the opportunity to convert. If notice is not provided, then the conversion period is extended until 15 days after the insurer provides the conversion notice. However, the extension period for failure to provide a conversion notice will not extend the conversion deadline for more than 60 days after the expiration date of the conversion period provided in the policy. +N.M. Stat. Ann. § 59A-21-22.
Continuation of Coverage
When active employment is a condition of insurance, a group policy must allow an insured employee to continue coverage during the employee's total disability. The employee must continue to make timely payments of any premium that would have been required had total disability not occurred. The continuation period is six months from the date on which the total disability started, but not beyond the earlier of:
- Approval by the insurer of continuation of the coverage under any disability provision that the group insurance policy may contain; or
- The discontinuance of the group insurance policy.
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