Board of directors and reasonable health insurance

NCUA is somewhat ambiguous of what it considers reasonable health insurance and has addressed this issue on a case-by-case basis. Along the way, NCUA has issued several NCUA Legal Opinion Letters that may provide some clues into what NCUA may consider appropriate health insurance coverage. A credit union finds its authority to provide health insurance to its board of directors in section 701.33(b)(2)(ii). Section 701.33(b)(2)(ii) allows a credit union to provide

reasonable health, accident and related types of personal insurance protection, supplied for officials at the expense of the credit union: Provided, that such insurance protection must exclude life insurance; must be limited to areas of risk, including accidental death and dismemberment, to which the official is exposed by reason of carrying out the duties or responsibilities of the official’s credit union position; must cease immediately upon the insured person’s leaving office, without providing residual benefits other than from pending claims, if any; except that a credit union must comply with federal and state laws providing departing officials the right to maintain health insurance coverage at their own expense.

Emphasis added.

However, the question that looms is what is considered reasonable health insurance. In NCUA Opinion Letter 94-0435, NCUA addresses the “reasonable” question. The 94-0435 Letter finds health insurance is reasonable so long as its “reasonable in coverage and ceases immediately upon the insured person’s leaving office.” The same letter offers several instances where NCUA has found a credit union has provided reasonable health insurance in the past.


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