Chapter 22 - Group Health Insurance

Comparison of Individual and Group Plans

Individual Anyone can apply for coverage. Each person has a policy. Individual selects coverage options. Individual's health is evaluated. Coverage renewable at option of the insured, sometimes insurer. All accidents are covered. Group Only group members are covered. Group must meet size and purpose definitions. There is one master contract. Benefits are essentially the same for all group members. Group as a whole is evaluated: no individual underwriting. Coverage stops when insured leaves the group. Only off-the-job accidents are generally covered.

Health Insurance Portability and Accountability Act (HIPAA)

July 1, 1997, ensures portability of group insurance coverage and includes various mandated benefits that affect small employers, the self-employed, pregnant women, and the mentally ill.

State Regulation

Many states have some form of mandated group health benefits. These commonly include required coverage for adopted or newborn children, continued coverage for handicapped dependents, coverage for treatment of alcoholism or drug abuse, and coverage for mammograms and pap smears. Extension of benefits is similar to a continuation of coverage. In this case, benefits that began to be paid while a health insurance policy was in force continue, or are extended, after the insurance contract is terminated. Some states require group policies to provide for extension of benefits for a covered member who is totally disabled at the time of policy discontinuance.

Coordination of Benefits Provision

Many working couples are doubly covered by group health insurance. Both husband and wife often have employer, provided group coverage, and each is covered as a dependent by the other's plan. (overinsured). COB is designed to give insureds as much coverage as possible while eliminating overinsurance.

Mandated Benefits

The law 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). Also, it expands coverage for mental illness by requiring similar coverage for treatment of mental and physical conditions.

Notification Statements

Employers are obligated to provide notification statements to individuals eligible for COBRA continuation. -When a plan becomes subject to COBRA -When an employee is covered by a plan subject to COBRA -When a qualifying event occurs Following the notification of eligibility for continuation of benefits, an individual has 60 days in which to elect continuation.

Americans with Disabilities Act (ADA)

makes it unlawful for employers with 15 or more employees to discriminate on the basis of disability against a qualified individual with respect to any term, condition, or privilege of employment. Employees with disabilities must be given equal access to whatever health insurance coverage the employer provides to other employees.

Experience Rating Versus Community Rating

premiums for group insurance are based on experience rating. Establishing the premium for a group based on the group's previous claims experience. community rating sets premiums by using the same rate structure for all subscribers to a medical expense plan, regardless of their past or potential loss experience, and regardless of whether coverage is written on an individual or a group basis.

Pregnancy Discrimination

women affected by pregnancy, childbirth, or related medical conditions be treated the same for employment related purposes as other persons who are not affected in the same way but are in similar positions. This includes receiving benefits under an employee benefit plan, such as group health insurance.

Dependent Coverage

-The insured's spouse -The insured's children -The insured's dependent parents -Any other person who is dependent on the insured Dependent children must be younger than a specified age (usually 19, or up to 25 if attending school full time).

GROUP COVERACGE PROVISIONS

-describe who is eligible for the group plan -describe when individuals become eligible for the plan -specify the minimum number of individuals and the minimum participation by eligible people required to sustain the plan -specify the amounts of insurance to which individual group members are entitled -describe the responsibilities of the master policyowner

Group health plans

-disability income -accidental death and dismemberment -hospital expense -surgical expense -medical expense

Duration of Coverage

An employer is not required to make continuation coverage available indefinitely. The rationale behind COBRA is to provide transitional health care coverage until the employee or family member can obtain coverage or employment elsewhere. The maximum period of coverage continuation for termination of employment or a reduction in hours of employment is 18 months. For all other qualifying events, the maximum period of coverage continuation is 36 months. Disqualifying events: -first day for which timely payment is not made -date the employer ceases to maintain any group health plan -The first date on which the individual is covered by another group plan -The date the individual becomes eligible for Medicare

Age Discrimination in Employment Act (ADEA)

This act applies to employers with 20 or more employees and is directed toward employees age 40 or older. In general, this act prohibits compulsory retirement, except for those in executive or high policymaking positions.

Portability

makes it easier for individuals to change jobs and still maintain continuous health coverage. If an employer offers health benefits to its employees, the employer now must make full health care coverage available immediately to newly hired employees who were previously covered at another job.

Conversion Privilege

allows the insured to convert group coverage to individual coverage without evidence of insurability. This privilege goes into effect only when the insured is no longer eligible for group coverage because: -insured's employment is terminated -The insured becomes ineligible for coverage because the class he was insured under is no longer eligible for coverage -The insured's dependent child reaches the age specified in the policy as the age of terminating dependent coverage. The insured has 31 days from the time of ineligibility to convert to the new plan of insurance.

Qualifying Event

an occurrence that triggers an insured's protection under COBRA. Qualifying events include the death of a covered employee, termination or reduction of work hours of the covered employee, Medicare eligibility for the covered employee, divorce or legal separation of the covered employee from the covered employee's spouse, the termination of a child's dependent status under the terms of the group insurance plan, and the bankruptcy of the employer.

Qualified Beneficiary

any individual covered under an employer maintained group health plan on the day before a qualifying event. Usually, this includes the covered employee, the spouse of the covered employee, and dependent children of the employee.

Omnibus Budget Reconciliation Act (OBRA)

extended the minimum COBRA continuation of coverage period from 18 to 29 months for qualified beneficiaries disabled at the time of termination or reduction in hours. The disability must meet the Social Security definition of disability, and the covered employee's termination must not have been for gross misconduct.

Continuation of Benefits - (COBRA)

federal law that requires employers with 20 or more employees to provide former employees and their families a continuation of benefits under the employer's group health insurance plan. Coverage may be continued for 18 to 36 months. Employees and other qualified family members who would otherwise lose their coverage because of a qualifying event are allowed by COBRA to continue their coverage at their own expense at specified group rates. COBRA specifies the rates, coverage, qualifying events, qualifying beneficiaries, notification of eligibility procedures, and time of payment requirements for the continuation of insurance.

Employee Retirement and Income Security Act (ERISA)

intended to accomplish pension equality, but it also protects group insurance plan participants. ERISA includes stringent reporting and disclosure requirements for establishing and maintaining group health insurance and other qualified plans.

Tax Equity and Fiscal Responsibility Act (TEFRA)

intended to prevent group term life insurance plans (usually part of group health insurance programs) from discriminating in favor of key employees. Key employees include officers, the top 10 interest-holders in the employer, individuals owning 5% or more of the employer, or individuals owning more than 1% who are compensated annually at $150,000 or more.