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					 Thomas P. DiNapoli                                     OFFICE OF THE
     COMPTROLLER                                        NEW YORK STATE COMPTROLLER

                                                        DIVISION OF STATE
                                                        GOVERNMENT ACCOUNTABILITY

Audit Objective............................... 2
                                                           NEW YORK STATE
Audit Results - Summary............... 2
                                                           THRUWAY AUTHORITY
Background..................................... 3
                                                           AND NEW YORK STATE
Audit Findings and
 Recommendations....................... 3                  CANAL CORPORATION
Primary Enrollees ............................. 3
Eligible Dependents.......................... 5
Recommendations............................. 6

Audit Scope and Methodology....... 6                       ELIGIBILITY FOR HEALTH
Authority ......................................... 7      INSURANCE COVERAGE
Reporting Requirements................ 7

Contributors to the Report ............ 7

Appendix A - Auditee Response .... 8                       Report 2008-S-50
           AUDIT OBJECTIVE                      In January 2008, at the start of our audit field
                                                work, we found that the Authority was
The objective of our audit was to determine     inappropriately paying health insurance
whether the New York State Thruway              premiums for its uncompensated Board
Authority and its subsidiary, the New York      members. We brought this to the attention of
State Canal Corporation, are enrolling only     Authority officials, and they have changed
eligible people in the New York State Health    their policy. Beginning in March 2008, the
Insurance Program (NYSHIP), which is            Authority will require uncompensated Board
administered by the New York State              members who wish to enroll in NYSHIP to
Department of Civil Service (Department).       pay the entire monthly health insurance
                                                premium. This brings the Authority into
     AUDIT RESULTS - SUMMARY                    compliance with an opinion issued by the
                                                Attorney General’s Office in February 2007.
NYSHIP provides health insurance coverage       Between February 2007, when the Attorney
for active and retired State employees and      General’s Office issued its opinion, and
their dependents. NYSHIP also provides          March 2008, the Authority paid health
coverage for other participating employers,     insurance premiums totaling $51,667 for four
including the New York State Thruway            current uncompensated Board members and
Authority and its subsidiary, the New York      one former uncompensated Board member.
State Canal Corporation. There is a single
Health Benefits Administrator who handles       Finally, we found the Authority notifies the
NYSHIP       enrollments,    changes,   and     Department in a timely fashion when
disenrollments for both entities (hereafter     employees leave the payroll. As a result, the
referred to as the Authority). We reviewed      Authority does not pay health insurance
information from NYSHIP, as well as             premiums for individuals who leave service,
personnel folders and other documentation       other than retirees who are eligible to
retained by the Authority, to determine         continue their coverage.
whether     individuals   receiving   health
insurance coverage were eligible under          Our report contains two recommendations to
Department and Authority guidelines.            Authority officials to correct the problems we
                                                identified during our audit.          Authority
Based on our review of the personnel folders    officials generally agreed with our
for a judgmental sample of primary enrollees,   recommendations and indicated they have
we concluded that the Authority enrolls into    taken steps to implement them.
NYSHIP only individuals who are current or
retired employees. However, we also found       This report, dated July 31, 2008, is available
that the Authority does not always obtain       on our website at:
sufficient documentation from its employees     Add or update your mailing list address by
to demonstrate that individuals enrolled as     contacting us at: (518) 474-3271 or
dependents qualify under Department rules.      Office of the State Comptroller
Since it does not always ensure that            Division of State Government Accountability
employees provide appropriate proof when        110 State Street, 11th Floor
enrolling dependents, it is possible that the   Albany, NY 12236
Authority enrolls ineligible individuals.

Report 2008-S-50                                                                    Page 2 of 8
              BACKGROUND                            dependents, and 5,223 dependents, for a total
                                                    of 10,264 individuals.
The Department administers NYSHIP on
behalf of State agencies and other                  We reviewed information from the
participating employers. Civil Service Law          Department, as well as personnel folders and
and Regulations specify the standards that          other documentation retained by the
participating employers must comply with            Authority, to determine whether individuals
regarding eligibility for their employees and       receiving health insurance coverage through
retirees who wish to enroll in NYSHIP, as           the Authority were eligible under Department
well as the requirements for covering               and Authority guidelines.
dependents, such as spouses, children, and
other individuals. Participating employers                    AUDIT FINDINGS AND
also have the flexibility to establish their own              RECOMMENDATIONS
policies within certain areas of NYSHIP, such
as the service requirement to be eligible for                    Primary Enrollees
health insurance coverage in retirement and
the employer/employee/retiree contribution          Primary enrollees in NYSHIP include
ratios.                                             Authority     employees,      retirees,  Board
                                                    members,       and    surviving      dependents
Each participating employer has one or more         (spouses). To qualify for NYSHIP coverage
Health Benefits Administrators, who are             as an employee of the Authority, an
responsible for handling the actual enrollment      individual must be a part-time or full-time
process, as well as updates when an                 employee. Eligibility begins on the first of
employee’s circumstances change.           The      the month following the month of hire.
Department oversees the entire health               Retirees are required to have had at least five
insurance coverage process, including paying        years of employment at an entity that
the insurance carriers for all covered              participates in NYSHIP, with at least one year
individuals and billing the participating           of that time with the Authority, to be enrolled.
employers for these individuals. During State       A surviving dependent must be the spouse of
fiscal year 2007-08, NYSHIP covered more            a deceased Authority employee who had at
than 1 million primary enrollees and their          least ten years of employment and who was
dependents, including 232,000 employees and         enrolled in NYSHIP at the time of death.
retirees of participating employers.       The      According to the Civil Service Law, the
yearly cost of the program is approximately         Authority may also provide health insurance
$6 billion.                                         to Board members who have served at least
                                                    six months in their position.
The Authority maintains the State’s
superhighway system to provide motorists            We selected a judgmental sample of 74
with a safe driving environment.             The    primary enrollees who were enrolled in
Authority, through its subsidiary, the New          NYSHIP between April 2005 and November
York State Canal Corporation, is also               2007, where the Authority was the employer
responsible for the State’s four historic canals.   of record.      This sample included 65
During 2007, the Authority provided health          employees and retirees, 5 surviving
insurance coverage through NYSHIP to 3,489          dependents, and 4 Board members. Some of
employees, 1,394 retirees, 158 surviving            these individuals were no longer enrolled in
                                                    NYSHIP at the time of our site visit.

Report 2008-S-50                                                                       Page 3 of 8
However, all of them had been enrolled in          work elsewhere. As a result, the Authority
NYSHIP at some point during our audit              does not continue to pay health insurance
scope.                                             premiums for former staff.

For all but three of these individuals, we         As previously noted, the Authority may enroll
reviewed the personnel folder maintained by        Board members in NYSHIP if they have
the Authority to determine whether they had        served at least six months in their position.
been eligible for enrollment in NYSHIP at the      However, in February 2007, the State
time of enrollment. For the 71 primary             Attorney General’s Office issued a clarifying
enrollees for whom personnel folders were          opinion that stated an uncompensated Board
available, we determined that the individual       member of a public authority that participates
was either an employee or a Board member of        in NYSHIP may enroll in NYSHIP, but the
the Authority at the time of enrollment or was     public authority may not pay any part of the
a qualified dependent of an employee, in the       premium, as that premium payment would be
case of surviving dependents.                      considered compensation.        The enabling
                                                   legislation for the Authority (Public
The personnel folders for three individuals        Authorities Law § 352) states that its Board
were not available at the time of our audit.       members serve without salary or other
All three were for persons who had left            compensation.      Therefore, the Authority
service with the Authority (retirees), but         should not pay the health insurance premiums
continued to be enrolled in NYSHIP.                for any Board members who are enrolled in
Because none of these individuals have had         NYSHIP.
any activity with the Authority for at least six
years, the personnel folders had been disposed     As of January 2008, we found that the
of, in accordance with Authority policy.           Authority was paying health insurance
                                                   premiums on behalf of Board members
The Authority should be paying health              enrolled in NYSHIP. After we brought this
insurance premiums only on behalf of its           issue to the attention of Authority officials,
current employees and retirees. When an            they changed their policy. Starting in March
individual leaves employment with the              2008, the Authority would no longer pay any
Authority - even if the individual goes to         part of the health insurance premiums for
another participating employer - the Health        uncompensated Board members.              Any
Benefits Administrator should update the           uncompensated Board member electing to
information in the Department’s New York           enroll or continue existing NYSHIP coverage
Benefit Eligibility and Accountability System      through the Authority would have to pay the
(NYBEAS) so that the Authority is no longer        Authority the entire health insurance premium
billed for that person’s health insurance          amount.
                                                   Between February 2007, when the Attorney
The Department provided us with a download         General’s Office issued its opinion, and
of individuals enrolled in NYSHIP between          March 2008, the Authority paid health
April 1, 2005, and November 30, 2007.              insurance premiums totaling $51,667 for four
Based on our testing of this data, we              current uncompensated Board members and
concluded that the Authority’s Health              one former uncompensated Board member.
Benefits Administrator is updating NYBEAS          In addition, the Authority continued to pay
timely when Authority employees leave to           health insurance premiums for a former Board

Report 2008-S-50                                                                    Page 4 of 8
member who served when the Authority’s            Of the 71 primary enrollees we reviewed, 59
Board was compensated. The Authority has          had family coverage. These 59 primary
requested a clarification from the Attorney       enrollees covered a total of 173 dependents,
General’s Office on whether the February          including 48 spouses, 120 children, 1
2007 opinion covers this individual, since he     domestic partner, and 4 other dependents.
was compensated for his time on the
Authority’s Board. In the meantime, the           Of the 168 spouses and children enrolled in
Authority will continue to pay the premiums       NYSHIP from our sample, 81 were enrolled
for him.                                          prior to September 1, 1999, and we found
                                                  signed and completed enrollment forms for 74
            Eligible Dependents                   of these.     The remaining seven were
                                                  dependents of employees who had transferred
The       Department     requires       certain   to the Authority from another participating
documentation as evidence that an individual      employer. According to Authority officials,
is a dependent eligible for health insurance      they do not require supporting documentation
coverage. Required documentation can take         for dependents whose enrollment in NYSHIP
the form of marriage certificates for spouses,    pre-dates the employee’s service with the
birth certificates for children, and certain      Authority.
other required legal forms related to special
situations like domestic partnerships and         Of the 87 spouses and children enrolled after
adoptions.                                        August 31, 1999, we found that 51 had
                                                  sufficient documentation on file, but 26 (30
In August 1999, the Department issued a           percent) either had no documentation or had
guidance memo requiring all Health Benefits       only an enrollment form signed by the
Administrators to retain copies of these          employee.       The remaining ten were
supporting documents for all dependents           dependents of employees who had transferred
enrolled in NYSHIP on or after September 1,       to the Authority from another participating
1999, to ensure that only eligible individuals    employer. In these latter cases, the Authority
were enrolled as dependents. Prior to this        had not obtained supporting documentation
time, Health Benefits Administrators were         from either the employee or the previous
expected to obtain and retain only a              employer. Since it does not always ensure
completed enrollment form, not proof of           that employees provide appropriate proof
eligibility.                                      when enrolling dependents, it is possible that
                                                  the Authority enrolls ineligible individuals.
The current NYSHIP enrollment form
(revised in October 2006) includes a              According to the HBA [Health Benefits
statement to be signed by the employee,           Administrator] Handbook for Participating
authorizing salary deductions for health          State Employers (HBA Handbook), issued by
insurance premiums. The form also states          the Department in 1993, a participating
that the information provided is accurate and     employer is not required to offer coverage to
that failure to provide the required proofs of    domestic partners. The Authority does not
eligibility may result in a delay in the          extend coverage to domestic partners of its
availability of health benefits for themselves    employees.        However, we found one
or any dependents.                                dependent coded in NYSHIP as a domestic
                                                  partner. When we reviewed the personnel
                                                  folder for the primary enrollee, we determined

Report 2008-S-50                                                                   Page 5 of 8
this dependent was a spouse who was              government auditing standards. We audited
inadvertently entered into NYBEAS twice.         the enrollment of individuals and their
When canceling the duplicate entry, the          dependents in NYSHIP by the New York
Health Benefits Administrator used the code      State Thruway Authority and its subsidiary,
for domestic partner (DP), thinking it meant     the New York State Canal Corporation, for
duplicate entry.      While the coverage         the period April 1, 2005, through March 13,
overlapped between the two entries, the          2008.
Authority incurred no additional cost, because
family coverage includes an unlimited            To accomplish our audit objective, we
number of dependents.                            reviewed State laws and regulations regarding
                                                 participation    in    NYSHIP,      including
In addition to a spouse, domestic partner, or    requirements for enrollment of primary
child, a primary enrollee may include as a       enrollees and their dependents. We also
dependent any individual for whom the            reviewed Authority guidelines regarding
employee provides more than half the support     health insurance, including eligibility
each year. According to the HBA Handbook,        requirements for employees, retirees, and
the    employee     must     provide    court    dependents. In addition, we interviewed
documentation or other evidence that the         Authority officials and staff to identify the
individual qualifies as a dependent of that      policies and procedures in place for
employee for health insurance purposes.          processing initial enrollments and enrollment
Of the 59 primary enrollees in our judgmental
sample who had family coverage, 4 enrollees      We obtained a list of all primary enrollees and
had dependents coded as other than spouse or     their dependents who received health
child.    The personnel folders for each         insurance coverage during our audit period.
contained    the     required   forms     and    From that list, we selected a judgmental
documentation to demonstrate that the            sample of 74 primary enrollees and their 176
individual qualified as a dependent for health   dependents, for a total of 250 individuals. We
insurance purposes.                              reviewed the 71 personnel folders at the
                                                 Authority, which were available at the time of
             Recommendations                     our site visit, to determine how each
                                                 individual in our sample initially qualified for
1. Ensure that health insurance premiums for     coverage, whether the documentation
   uncompensated Board members enrolled          supporting that qualification was sufficient,
   in NYSHIP are not funded by the               and whether the individual still appeared to be
   Authority.                                    eligible or was no longer enrolled in
2. Require employees to provide supporting
   documentation when enrolling dependents       In addition to being the State Auditor, the
   and maintain a copy in the personnel          Comptroller      performs       certain   other
   folders.                                      constitutionally and statutorily mandated
                                                 duties as the chief fiscal officer of New York
 AUDIT SCOPE AND METHODOLOGY                     State. These include operating the State’s
                                                 accounting system; preparing the State’s
We conducted our performance audit in            financial statements; and approving State
accordance  with  generally  accepted            contracts, refunds, and other payments. In

Report 2008-S-50                                                                    Page 6 of 8
addition, the Comptroller appoints members       comment. Their comments were considered
to certain boards, commissions and public        in preparing this report, and are included as
authorities, some of whom have minority          Appendix A.
voting rights.     These duties may be
considered management functions for              Within 90 days of the final release of this
purposes of evaluating organizational            report, as required by Section 170 of the
independence under generally accepted            Executive Law, the Chairman of the New
government auditing standards.      In our       York State Thruway Authority shall report to
opinion, these functions do not affect our       the Governor, the State Comptroller, and the
ability to conduct independent audits of         leaders of the Legislature and fiscal
program performance.                             committees, advising what steps were taken to
                                                 implement the recommendations contained
               AUTHORITY                         herein, and where recommendations were not
                                                 implemented, the reasons therefor.
This audit was performed pursuant to the
State Comptroller’s authority under Article X,     CONTRIBUTORS TO THE REPORT
Section 5, of the State Constitution and
Section 2803 of the Public Authorities Law.      Major contributors to this report include
                                                 Frank Houston, John Buyce, Greg Petschke,
     REPORTING REQUIREMENTS                      Jennifer Paperman, Sharon Salembier, Ray
                                                 Barnes, W Sage Hopmeier, Richard
A draft copy of this report was provided to      Podagrosi, Andre Spar, and Dana Newhouse.
Authority officials for their review and

Report 2008-S-50                                                                 Page 7 of 8
                   APPENDIX A - AUDITEE RESPONSE

Report 2008-S-50                                   Page 8 of 8

Description: New York State Retired Employees document sample