ch 18 - group health insurance
Termination of group coverage
- Employer terminates the term - Employer didn't pay premium - Employee quits, is laid off, reduction in hours - Dependents divorce, employee dies, employee terminated, dependent reaches age 26
General eligibility rule
a group must have been formed for a purpose other than obtaining insurance for its members. "natural group"
Multiple employer trust (MET)
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 plan
Experience rating
a method of establishing the premium on the groups previous claims experience. The larger and more homogenous (similar) the group, the closer it comes to reflecting standard mortality and morbidity rates
Composition of the group
age, sex, and income of the members of the group will affect the potential benefits that will be paid
Qualified beneficiary
any 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, and dependent children of covered employees, including children born or adopted during the first 18 months of a benefit continuation period
Coordination of benefits
applies when a person is covered by two group policies. One plan is primary and pays first, the other plan is secondary and pays only if loss is greater than primary coverage. The primary plan is the employee plan and the secondary plan is the spouse's employer plan.
OBRA
continue coverage to 29 months for qualified beneficiaries disabled at the time of termination. Pay up to 150% of the group premium during the 11 month disability extension
Contributory/non contributory
contributory - employees pay part or all of the cost, minimum of 75% participation. Non-contributory - employer pays entire cost 100% participation
Group contract
cover many people under 1 contract. Reduces the plan cost and lowers premiums. Premiums cost less than individual coverage. The two parties in a group contract are the insurer and the sponsoring group The policyholder/owner is the sponsoring group and it controls the master policy
Dependent eligibility
coverage for employees spouse or child up to age 26. Includes step children and adopted children and it applies to whether or not the child is married or a student. Many states require that children older than age 26 be covered by a plan if they are mentally or physically disabled and unable to support themselves
Qualifying events
death of qualified employee, termination, reduction of work hours, medicare, divorce, bankruptcy of the employer, termination of a child's dependent status
Employer group plans
employer may sponsor a group insurance plan for its employees
Employee eligibility
employers cannot discriminate with group benefits. All employees can enroll regardless of their age, handicaps, or sex. Pregnancy and maternity must be treated like any other covered condition. Basic employment criteria like full time and actively at work (not on disability or other inactive status) Employers may also exclude union workers as a class, since their compensation and benefits are covered by a collective bargaining agreement
ERISA
enacted to protect the interests of participants in employee benefit plans as well as the interests of the participants beneficiaries. Plan deals with qualified pensions and also group insurance. Requires that certain information be able to plan participants, beneficiaries, and the dept of labor
Group life plan characteristics
enrollment eligibility, low cost coverage, no proof of insurability to enroll, and convertibility options when exiting the plan
COBRA
federal law that requires 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 may be continued for 18 to 36 months Employees or dependents must pay the entire premium for the coverage COBRA specifies rates, coverage, qualifying events, qualifying beneficiaries, notification procedures, and time of payment requirements for the continued insurance
Marketing considerations
group policies are regulated in state where employer has their home office.
Flow of members through the group
individuals joining and leaving the group on a regular basis reduces the risk of adverse selection
Late enrollees
individuals who want to enroll for coverage at any other time other than the initial eligibility period or an annual open period may be required to provide evidence of insurability
Administrative capability
large employers can lower group premium costs by helping administer the plan and use the insurer for stop loss coverage and/or claims
Size of the group
larger groups can more likely avoid adverse selection. Small group = 2 to 50 lives, large group = 51 or more lives
Group credit disability insurance
lender is paid, amount of insurance no greater than the debt
HIPAA
mandated benefits for small employers, self-employed, pregnant women, mentally ill. Includes most health coverage. Small employers cannot be denied Guaranteed 48 hour hospital stay for new mothers after regular delivery and 96 hours for C-section
Duration of coverage
maximum period of coverage continuation for termination of employment is 18 months. For all other qualifying events, max period of coverage continuation is 36 months Coverage must be the same, premium must be the same, terminated individual may also have to pay an additional amount each month not exceeding 2% of the premium to cover the employers admin expenses Continuation applies only to health benefits under COBRA
Notification statements
must be provided when a plan becomes subject to COBRA, an employee is covered by a plan subject to COBRA, and a qualifying event occurs. Must provide statement within 14 days. Option to elect continuation expires in 60 days after receiving notification
Advertising
must not be misleading or obscure and clearly outline all policy exclusions or limitations on coverage as well as policy benefits.
Probationary period
new employees must wait before they can enroll in an emplyers group health insurance plan. Period typically range from 1-6 months
Multiple employment welfare arrangements (MEWAs)
provide health and welfare benefits to two or more unrelated employers. The purpose is to provide affordable health coverage to small employers
Certificate of coverage
provides evidence of coverage, who is covered by the plan, and summarizes the benefits. The individual members covered by the group plan are not parties to the group insurance contract and have no authority to make decisions regarding the plan
No loss, no gain
requires benefits for ongoing (disability) claims that started under an old plan to continue without imposing the new plan's eligibility requirements
Extension of benefits
requires 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, no matter what their past loss experience has been
Group underwriting considerations
size of the group composition of the group flow of members thru group plan design contributory/noncontributory persistency admin capability
Labor unions
sponsored under a Taft Hartley trust, may sponsor a group plan for its members or two or more labor unions may join together to provide group insurance for their collective members
Association group plans
trade, professional, or other type of association may sponsor a group plan for its members
Eligibility/enrollment period
typically 30-31 days. When new employees can enroll in group health insurance plan
"birthday rule"
used for determining the primary plan if a married couple has children. The parent whose birthday comes first in the calendar year (not the oldest) will be primary.
Open enrollment
usually once a year, no medical questions. Individuals who declined coverage during the initial eligibility period can enroll in the health plan during this period without providing evidence of insurability
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
Coinsurance and deductible carry over
when group health plans are replaced by another plan, the new insurers will allow coinsurance and deductibles paid under the old plan to count toward the new plans requirements. This eases the transition to the new plan for covered employees