UNIT 18 - Group Health Insurance
Reporting and Disclosure
-ERISA required certain information concerting employee benefit plan, including group insurance plans, must be made available to plan participants, their beneficiaries, the department of labor, and the IRS. Examples fo the information the must be distributed are: -a summary plan description to each plan participant and the department of labor. -A summary of material modifications that details changed in any description to each plan participant and the department of labor. -An annual return or report submitted to the IRS -a Summary annual report to each plan participant -Any terminal report to the IRS
Employee eligibility
-Employers can establish basic employment criteria. the employee must be: full-time, and actively working -t has is, not on disability leave or other inactive status. -employers may also exclude union workers as a class, since their compensation and benefits are covered by collective bargaining agreement.
Group Contract
-The two parties in a group insurance contract are the insurer and the sponsoring group. The policyholder/owner is the sponsoring group and it controls the master policy.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
-a federal law that required employers with 20 or more employees to allow former employees and their dependents to continue the benefits provided by the employer's group health insurance plan. -coverage can be continued for 18 to 26 months. employees must pay the entire premium of coverage. -COBRA specifies rates, coverage, qualifying events, qualifying beneficiaries, notification procedures, and time of payment requirements for the continuers insurance. ** -federal law -applied to employers who have regularly employ 20 or more people -employers must allow employee or dependents to remain on group plan. -applies to medical and dental- not life insurance. -extends coverage for 18 months if employees employment is terminated, reduction in hours. -extends coverage for 36 months if dependents no longer qualify due to divorce, too old, death of employee. -premium is 102% of regular group premium, - employer does not contribute,
Composition of the group
-ages, sex, and income of the members of the group will affect the potential benefits that will be paid.
Group insurance eligibility is limited to the following groups:
-an employer may sponsor a group insurance plan for its employees. These are known as employer group plans. They are sometimes referred to as an employee group plans. -A multiple employer trust (MET) is a group of small employers in the same industry who either form together in order to purchase group insurance as one entity or self-fund a plan. -Multiple employment welfare arrangements (MEWAs) provide health and welfare benefits to two or more unrelated employers. The purpose is for affordable health coverage to small employers. -A labor union may sponsor a group insurance plan for its members, or two or more labor unions join together to provide group insurance for their collective members. Union plans are sponsored under Taft-hartley Trust. -A trade, professional, or other type of association may sponsor plan for its members. These are known as association group plans. -A lender., or creditor, may sponsor a group health insurance plan for its group of debtors. known as a group credit disability insurance. Two features separate group credit insurance from other types of group insurance: --while other types of group insurance may not be made payable to the sponsoring group, group credit insurance cane be, --the amount of coverage under a group credit insurance plan is limited to the amount of insured's debt.
qualified beneficiary
-an individual covered under an employer-maintained group health plan on the day before a qualifying event. Usually this includes: -covered employees -spouse of covered employees -dependent children of covered employees, including children born or adopted during the first 18 months of the benefit continuation period.
Fiduciary Responsibility
-anyone with control over plan management or plan assets of any kind must discharge that fiduciary duty solely in the interests of the plan participants and their beneficiaries. strict penalties are imposed on those who do not fulfill this responsibly.
Employee Retirement income security Act (ERISA)
-enacted to protect the interests of participants in employee benefit plans as well as the interests of the participants beneficiaries. -much of the law deals with qualified pension plans, but some sections also apply to group insurance plans/ ** -protects employee and beneficiaries -plan deals with qualified pensions and also group insurance -ERISA requires that certain information be able to plan participants, beneficiaries, and the department of labor.
Omnibus Budget Reconciliation Act of 1989 (OBRA)
-extended the minimum COBRA continuation of coverage period to 29 months for qualified beneficiaries disabled at the time of termination. -disability must meet the SS definition of disability. -the plan can charge qualified beneficiaries an increased premiums, up to 150% of the group premium, during the 11-month disability extension. (months 19 to 29) ** 29 months if disabled at time of termination
Types of eligible groups
-general eligibility rule is; a group must have been formed for a purpose other than obtaining insurance for its members. this defines a natural group. the insurance plan must be incidental to the group rather than its primary reason for being. types of groups are:employer group plans, multiple employer trust, Multiple employment welfare arrangements, labor union, association group plans, group credit disability insurance.
HIPPA preexisting condition
-group health plan may not define a preexisting condition more restrictively than: a condition in which medical advice, diagnosis, care, or treatment was recommended or received during the six months prior to the enrollment date in the plan. --preexisting condition can be excluded for up to 12 months (18 months for a late enrollee)
underwriting criteria
-group insurance underwriters do not evaluate individuals but group as a whole. -premiums are based on the experience of the group which can change at renewal.
Mandated Benefits HIPPA
-guarantees coverage for a 48-hour hospital stay for new mothers and their babies after a regular delivery . (96 hours for a cesarean section birth) -small employers cannot be denied group health insurance coverage because one or more employees are in poor health.
Privacy Disclosures HIPPA
-imposes specific requirements on health care providers, insurers, and producers with respect tot he privacy of the insureds' health and medical information. -applican must be given notice of the following: --the insurer's privacy practices --the applicant rights to maintain privacy --the applicants opportunity to opt-out -the producer must provide the applicant with the Notice of Insurance information Practices.
HIPPA Creditable coverage
-includes most health coverage, including coverage under a group health plan, an HMO, an individual health insurance policy, medicaid, or medicare. -as long as no break in creditable coverage of 63 or more days, an individual's prior credible coverage reduced the maximum preexisting condition exclusion period that new group health plan can apply to that individual.
late enrollees
-indivudals who want to enroll for coverage at any time other than the initial eligibility period or an annual open enrollment period may required to provide evidence or insurabilty.
Administrative capability
-large employers can lower group premium cost by helping administer the plane dn use the insurer for stop-loss coverage or claims processing
Size of the group
-larger groups can more likely avoid adverse selection. Small group=2 to 50 lives, large group=51 for more lives.
dependent eligibility
-made available for employees spouse or children up to age 26. -this includes step children and adopted children, whether or not the child is married or a student. coverage also made available for participating employees dependent parents.
duration of coverage
-maximum period of coverage continuation for termination or reduction of hours of employment is 18 months. -for all other qualifying events, maximum period of coverage continuation is 36 months -certain events can result in a termination of coverage before specified time. these disqualifying events and their dates are as follows: -the first day a premium is overdue -the date an employer ceases to maintain any group health plan -the date on which the individual is covered by another group plan -the date the individual becomes eligible for medicare. -the coverage must be the same the insured had while employed. premium must be the same, but terminated employee must pay entire premium. -the terminated individual may also have to pay additional amount not exceeding 2% of the premium to cover employers admin expenses. -continuation applied only to the health benefits under COBRA
notification statements
-must provide notification statements to individuals eligible for COBRA continuation within 14 days. This notification must be provided when: -a plan becomes subject to cobra -an employee is covered by a plan subject to cobra -a qualifying event occurs. -company must notify new employees of their rights under COBRA when they are informed of other employee benefits. Notification of an employees spouse of dependents must be made in writing and sent to last known address. -the option to elect continuation expires 60 days after an individual receives the notification
Probationary, or waiting, period
-new employees must wait before they can enroll in an employer group insurance plan. range from one to six months
Regulatory jurisdiction
-no regulatory jurisdiction issued when employer purchases group insurance plan from an insurer domiciled in employers home state. -group health insurance policy is regulated by the state in which it is delivered, assuming that state is also where the employer has its principle business office.
Experience Rating
-premium cost for group insurance is based on experience rating, a method of establishing the premium on the group's previous claims experience. -The larger and more homogenous (similar) the group, the closer it comes to reflecting standard morality and morbidity rates. ** -based on claims history of the individual group
Certificate of Coverage
-provides evidence of coverage, who is covered by the plan, and summarizes the benefits.
coordination of benefits
-provision which says that if a loss is payable under two group insurance plans, one plan will be considered primary and the other considered secondary. -the primary plan pays benefits up to its limit first, -the secondary pays up to its limit for costs not covered by the primary plan. -with married couples, primary plan is the individuals employer plan, the secondary plan is the spouses employer plan. -birthday plan is for determining the primary plan if the married couple has children. The parent whose birthday comes earliest during the year will use their plan as primary coverage for their children's covered medical expenses. -if divorced the plan of the parent with custody is primary, barring any other legal arrangement.s ** -applies when a person is covered by two group plans -one plan is primary -other plan is secondary -only pays if loss is greater than primary coverage.
Qualifying events
-qualifying events when employee, spouse, or dependent child lose coverage under group insurance contract, events include: -death of a covered employee. -termination of a covered employee, except for gross misconduct. -reduction of work hours of a covered employee -Medicare eligibility for a covered emplyee -divorce or legal separation of a covered employee from the covered employees spouse -termination of a childs dependent status -bankruptcy of the employer.
extension of benefits
-requires by state laws, that benefits paid by an in-force policy continue after the policy is terminated. Some states require an extension of benefits to a totally disabled member at the time of policy discontinuance.
Community rating
-sets premium costs by using the same rate structure for all subscribers to a medical expense plan, not matter what their past loss experience has been. * -based on pooling groups (also used in rating individual insurance)
Group underwriting criteria includes
-size of group -composition of the group -Flow of members through the group -Flow of members through the group -Plan design -Contributory or noncontributory -persistency -Administrative capability
advertising
-states regulate the marketing and advertising of accident and health insurance policies to ensure truthful and full disclosure of pertinent information when selling polices. Advertisements must: -not be misleading or obscure -clearly outline all policy exclusions or limitations on coverage as well as policy benefits.
Health insurance portability and Accountability Act (HIPPA)
-took effect july 1 1997. ensures portability of group insurance coverage and included various mandated benefits that affect small employers, the self-employed, pregnant women, and mentally ill. ** HIPPA -preexisitng conditions -includes most health coverage -guaranteed 48 hour hospital stay for new mothers after regular delivery and 96 hours for C-section -Small employers cannot be denied.
Events that terminate coverage
-under group insurance plan may be terminated when any of the following occur: -the employer discontinues the plan or discontinues coverage for a certain class of employees -the group policy lapses because the employer did not pay the premium. -The employee or their dependent's coverage lapses because they did not pay the premium. -covered employee quits, is laid off, or they lose their full-time employment status -a spouse and children lose connection to the plan due to a divorce from the insured employee or the employee dies, terminates employment, or otherwise becomes ineligible for coverage. -A non-disabled dependent child reaches age 26
coinsurance and deductible carryover
-when group health insurance policy is replaced by another plan, the new insures will allow coinsurance and deductibles paid under the old plan to count toward the new plans requirement. -this eases the transaction to the new plan for covered employees.
eligibility period and open enrollment
-when probationary period ends, new employees can enroll in the group during eligibility or enrollment period -typically 30 or 31 days. -most states require insurers to offer open enrollment period every year.
Contributory or noncontributory
employees pay part of the cost in contributory plans, and at least 75% eligible employees must participate; the employer pays the entire cost in a noncontributory plan and 100% of eligible employees must participate.
Flow of members through the group
individuals joining and leaving the group on a regular basis reduces the risk of adverse selection
No loss, no gain,
statutes that require benefits for ongoing(disability) claims that started under an old plan to continue without imposing the new plans eligibility requirement.s
Plan design
what will be covered and for how much
persistency
when employers keep their group coverage with the same insurer year after year, the insurer's expenses are reduced.
