The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)


STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5568

September 25, 1979

SCHOOLS AND SCHOOL DISTRICTS:

Health insurance plans for employees

INSURANCE:

Health insurance plans for employees of school districts

HUSBAND AND WIFE:

Health insurance plans for husband and wife employed by school districts

The board of education of a school district may offer health insurance plans to its employees. However, where one employee works for one school district and the spouse for another and both elect to participate in the health insurance plans, the boards of education of the school districts should require coordination of benefits so that the insured does not receive compensation in excess of the loss.

Honorable Quincy Hoffman

State Representative

House of Representatives

P. O. Box 30014

Lansing, Michigan 48909

Dear Mr. Hoffman:

You have stated that 'most school districts offer . . . health insurance plans . . .' which employees may elect to participate in. In some instances, one employee works for one school district and the spouse another, and both elect to participate in the plans. You have therefore asked whether the provision of such duplicate coverage is a legal use of public funding.

OAG 1961-1962, No 3541, p 194 (October 21, 1961), stated:

'Act 269, P.A. 1955, as amended is known as the School Code of 1955. Section 617 thereof specifically grants to 'the board of education of any school district' the power to use money in the general fund of the district to provide insurance protection 'on a joint participating basis with school employees' to '(1) Provide for hospital and surgical benefits for employee and dependents,' and to '(2) Provide health and accident type coverage."

The School Code of 1976, 1976 PA 451, MCLA 380.1 et seq; MSA 15.4001 et seq, in Section 1255, grants authority to the Board of Education to provide health insurance coverage as stated above. Thus, the provision by school boards of health insurance benefits for their employees is a permissible use of public funds.

In Thompson v School District, No 1 of Moorland Township, 252 Mich 629; NW (1930), The Court stated:

'The issue presented to the court was whether it was against public policy for a husband, who was a school board member, to sign the contract of employment to hire his wife as a teacher in the school district. The court stated:

"Notwithstanding the provision of the school law broadly provides that a school officer shall not 'be personally interested in any way whatever, directly or indirectly, in the contract with the district, we think it is not applicable to the case here presented. Under [1911 PA 196], above quoted, Mr. Spoelman clearly has no financial interest in this contract. Any wages which may be paid Mrs. Spoelman as a teacher will be her individual property the same as though she were an entire stranger to Mr. Spoelman. The statute does not apply to one having only a remote interest which a school officer might have under many and varied circumstances."

(emphasis added)

See also OAG 1975-1976, No 4869, p 95 (June 4, 1975)

Applicable to the issue of whether the election of duplicate insurance benefits constitutes an illegal use of public funding is the fact that in Thompson, supra, the court considered the wages to the wife as her individual property the same as if she were 'an entire stranger to Mr. Spoelman'. Here, it is my opinion that the same principal would apply. Therefore, the provision of health insurance benefits for each employee and his or her dependents is a legal use of public funds.

It may also be noted that an election for dual coverage does not necessarily result in payment of dual benefits. Sections 3436, 3438 and 3440 of the Insurance Code of 1956, 1956 PA 218; MCLA 500.3436; MSA 24.13436; MCLA 500.3438; MSA 24.13438 and MCLA 500.3440; MSA 24.13440 provide for coordination of benefits. Thus, it is my opinion that the board of education of the school district should require its insurer to coordinate benefits so that the insured does not receive compensation in excess of the loss. The inclusion of such a clause will reduce the premium charge of the group policy.

Frank J. Kelley

Attorney General