Ch. 22 Group Health Insurance

Exercise 22.B 1. Employee Retirement and Income Security Act (ERISA) 1974 2.Tax Equity and Fiscal Responsibility Act (TEFRA) 1982 3. Consolidated Omnibus Budget Reconciliation Act (COBRA) 1985 4. Omnibus Budget Reconciliation Act (OBRA) 1989 5. Health Insurance Portability and Accountability Act (HIPAA) 1997

1. C - Establishes stringent reporting and disclosure requirements for establishing and maintaining group health insurance and qualified employer retirement plans. 2. B - Prevents employers form discriminating in benefit plans in favor of key employees and makes Medicare a secondary payor to group insurance for working employees even above age 65. 3. E - Requires employers with 20 or more employees to provide continuation of health benefits from employees and their families when they leave the plan. 4. A - Extends COBRA benefits for disabled employees from 18 to 29 months and provides spouses and dependent children up to 36 months of benefits if they lose COBRA benefits. 5. D - Ensures portability of group health coverage and includes various benefits affecting small employers, self employed, pregnant women, and the mentally ill.

Exercise 22. C Apply what you have previously learned by indicating which of the fol- lowing apply to individual insurance (I) and which apply to group insur- ance (G). 1. Anyone may apply for coverage. 2. There is one master contract. 3. Covers both occupational and non-occupational accidents and sickness. 4. Each person has a policy. 5. Organization must precede insurance.

1. I 2. G 3. I 4. I 5. G

17. The Age Discrimination in Employment Act applies to employees age A. 40 or older B. 45 or older C. 50 or older D. 55 or older

A. 40 or older Age Discrimination in Employment Act (ADEA) - Applies to employers with 20 or more employees and is directed toward employees age 40 or older. This act prohibits compulsory retirement, except of those in executive or high policymaking provisions. Employee benefits, which in the past usually ceased or were severely limited when an employee turned 65, must be continued for older workers, although some reductions in benefits may be allowed.

2. All of the following could be considered dependents except the insured's A. adopted children B. parents C. 25-year-old child who became physically disabled at 24 D. 21-year-old child who is attending college full time

C. the insureds 25 year old child who became physically disabled at 24 Dependent Coverage - Life or Health insurance benefits may be extended to the primary insureds dependents. Dependents may be any of the following individuals: - The insureds spouse - The insureds children - The insureds dependent parents - Any other person who is dependent on the insured. The insureds children can be stepchildren, foster children, or adopted children. Dependent children must be younger than a specified age (usually age 19 or up to 25 if attending school full time). A child may be a dependent beyond the ages of 19 or 25 if that child is permanently mentally or physically disabled before the specified age.

3. The coordination of benefits provision provides that when a person is covered under more than one plan, the total benefits cannot exceed A. the greater of the benefits provided B. the lesser of the benefits provided C. both of the bene ts combined D. the total medical expenses or loss of wages

D. the total medical expenses or loss of wages

Exercise 22.A True or False regarding conversion of group health

1. Conversion is permitted with evidence of insurability within 2 years of leaving employment if already under the care of a physician. - False 2. Conversion is only allowed if the insured's employment is terminated. - False 3. The insured typically has 31 days to convert to individual from group. - True 4. A converted plan is typically issued with reduced or limited benefits. - True 5. Typically an individual plan has higher premiums than group, but the coverage is usually better. - False

16. Under OBRA, an employer may terminate COBRA coverage because of coverage under another health plan A. as soon as the coverage is in force B. as long as the other health plan does not limit benefits for the insured's preexisting conditions C. as long as the other health plan limits bene ts for the insured's preexisting conditions D. only if the premiums for the new plan are paid entirely by the insured's new employer

B. Under OBRA, an employer may terminate COBRA coverage because of coverage under another health plan as long as the other health plan does not limit benefits for the insureds preexisting conditions.

10. Which federal law requires employers with more than 20 employees to include in their group insurance plan a continuation of benefits provision for all eligible employees? A. COBRA B. OBRA C. ERISA D. TEFRA

A. COBRA requires employers with more than 20 employees to include in their group insurance plan a continuation of benefits provision for all eligible employees. Consolidated Omnibus Budget Reconciliation Act (COBRA) -Cobra deals with the continuation of the exact same group coverage that the employee ha as a covered employee. This distinction is important so as not to confuse this provision with the conversion of group coverage to lesser amount of insurance as part of an individual plan. The premium is the same and the coverage is the same.- ONLY HEALTH not LIFE INSURANCE A federal law that requires employers with 20 or more employees to provide former employees and their families a continuation of benefits under the employees group health insurance plan. Coverage may be continued for up to 18 or 36 months. Cobra specifies the rates, coverage, qualifying events, qualifying beneficiaries, notification of eligibility procedures, and time of payment requirements for the continuation of insurance

15. Which of the following is considered a disqualifying event under COBRA? A. The employer ceases to maintain any group health plan. B. The employee is no longer eligible for the group health plan because of a change in the covered classes. C. The employee voluntarily leaves employment with the employer. D. The employee's employment is terminated by the employer.

A. The employer ceases to maintain any group health plan Qualifying Event - Is an occurrence the triggers an insureds protection under COBRA. - 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 employees spouse - The termination of a Childs dependent status under the terms of the group insurance plan, and - bankruptcy of the employer. Termination doesn't count if result of gross misconduct Qualified Event - is any individual covered under an employee maintained group health plan on the day before a qualifying event. aka the covered employee, the spouse, and dependent children.

12. Which federal law extends the minimum continuation of coverage period from 18 to 29 months for qualified beneficiaries disabled at the time of termination or reduction in hours? A. COBRA B. OBRA C. ERISA D. TEFRA

B. OBRA extends the minimum continuation of coverage period from 18 to 29 months for qualified beneficiaries disabled at the time of termination or reduction in hours. 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 employees termination must not have been for gross misconduct. - Changes to COBRA permit individuals who become disabled during the first 60 days of the 18 month coverage period to extend their coverage to 29 months, so as to extend coverage until the person would become eligible for Medicare (the 5 month waiting period plus 24 months of eligiblity for Social Security disability benefits) - Under OBRA an employe may terminate OBRA coverage because of coverage under another health plan provided the other plan does not limit or exclude benefits for a beneficiary preexisting conditions. - OBRA 1989 also clarifies that COBRA coverage may be terminated only because of Medicare entitlement, not merely eligibility. Before terminating COBRA coverage for beneficiaries at age 65, an employer must first be certain that the individual has actually enrolled under Medicare, Also, 36 months of COBRA coverage must be provided for the spouse and dependent children of a covered employee whose group insurance terminates because of entitlement of Medicare.

7. Under the coordination of benefits rule, the primary company pays A. if there is no other coverage B. as if there were no other coverage C. whatever the other coverage does not pay, up to the policy limits D. only if the other coverage refuses the claim

B. as if there were no other coverage

13. Which federal law is intended to accomplish pension equity but also protects group insurance plan participants? A. COBRA B. OBRA C. ERISA D. TEFRA

C. ERISA is intended to accomplish pension equity but also protects group insurance plan participants. Employee Retirement and Income Security Act (ERISA) -was 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. Summary plan descriptions must be filed with the Department of Labor and an annual financial report must be filed with the IRS. For other qualified plans, legal documentation of the trust agreement, plan instrument, plan description, plan amendments, claim and benefit denials, enrollment forms, certificates of participation, annual statements, plan funding, and administrative records must all be maintained.d

5. Which of the following is NOT part of the qualification process for legal dependency? A. Relationship to the insured B. Residency in the home C. Eligibility for insurance D. Listing on the insured's tax return as a dependent

C. Eligibility for insurance is not part of the qualification process for legal dependency.

4. An individual is NOT eligible for the conversion privilege if A. the insured's employment is terminated B. the insured becomes ineligible for coverage because the insured's class is no longer eligible for coverage C. the insured fails to make the conversion within 31 days D. the insured's dependent child reaches the age specified in the policy as the age of terminating dependent coverage

C. The conversion period is 31 days

8. Under the coordination of benefits rule, the secondary company pays A. if there is no other coverage B. as if there were no other coverage C. whatever the other coverage does not pay, up to the policy limits D. only if the other coverage refuses the claim

C. whatever the other coverage does not pay, up to the policy limits.

14. Which of the following provisions is NOT a part of HIPAA? A. Employers must make full healthcare coverage available immediately to newly hired employees who were previously covered for at least 18 months. B. New mothers and their babies must be allowed to stay in the hospital for at least 48 hours after a regular delivery. C. Small employers may not be denied group health insurance coverage because one or more employees is in poor health. D. Annual limits and lifetime spending limits may be applied to mental health coverage.

D. Anual limits and lifetime spending limits may be applied to mental health coverage. Health Insurance Portability and Accountability Act (HIPAA) -Ensures portability of group insurance coverage and includes various mandated benefits that affect small employers, the self employed, pregnant women, and the mentally ill. Portability - Makes it easier for individuals to change jobs and still maintain continuous health coverage. It makes sure newly hired employees who were previously covered for at least 18 months at another employer is immediately covered. Mandated Benefits - This law guarantees coverage for a 48 hour hospital say for new mothers and their babies after a regular deliver (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. The law eliminates the special limitations included in many policies, such as lifetime spending limits and annual limits applied to mental health coverage. Small employers (2 to 50) now cannot be denied group health insurance coverage because one or more employees are in poor health.

1. The conversion privilege allows the insured to continue group coverage without A. paying individual premiums B. filling out an application C. providing proof of termination of employment D. providing evidence of insurability

D. Providing evidence of insurability Conversion Privilege -Allows insured to convert group coverages to individual coverage without evidence of insurability. This privilege goes into effect only when the insured is no longer eligible for group coverage because of the following circumstances. - the insureds employment is terminated - The insured becomes eligible for coverage because the class he was insured under is no longer eligible for coverage (ex. to save expenses, a company that formerly provided coverage for all employees working not less than 20 hours per week may now only provide coverage to the class of employees who do not work less than 40 hours per week. - the insureds dependent child reaches the age specified in the policy as the age terminating dependent coverage. The insured has 31 days from the time of ineligibility to convert to the new plan of insurance. The new plan of insurance is an individual plan normally a hospitalization policy which will not provide the same benefits that the group plan did. usually, the group medical expense benefits are more liberal than the converted policy benefits. often, those who elect to exercise this conversion privilege do so because frequently they may have insurability problems. To limit adverse selection against the company, the insurer typically offers this conversion plan with reduced or limited benefits.

18. The Americans with Disabilities Act A. does not apply to acquired diseases such as AIDS B. permits exclusion of benefits for individual distinct groups of afflictions, such as cancer, muscular dystrophy, or kidney disease C. applies to all employers with 25 or more employees D. requires that employees with disabilities be given equal access to whatever health insurance is provided to other employees

D. Requires that employees with disabilities be given equal access to whatever health insurance is provided to other employees The Americas with Disabilities Act -It 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, although certain coverage limitations may be acceptable for mental and nervous conditions as opposed to physical conditions, as long as such limitations apply to employees without disabilities as well those with disables. The law forbids exclusion or limitation of benefits for: - specific disabilities such s deafness or AIDS - individually distinct groups of afflictions, such as cancer, muscular dystrophy, or kidney disease, - disability in general

11. Which federal law is intended to prevent group term life plans from discriminating in favor of key employees? A. COBRA B. OBRA C. ERISA D. TEFRA

D. TEFRA Tax Equity and Fiscal Responsibility Act (TEFRA) - intended to prevent group term life insurance plans from discriminate 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 1% who are compensated annually at $150,000 o more. TEFRA amends the Social Security Act to make Medicare secondary to group health plans. TEFRA applies to employers of 20 or more employees and to active employees and their spouses between ages 65 and 69. TEFRA also amends the Age Discrimination in Employment Act (ADEA) to require employers to offer these employees and their dependents the same coverage available to younger employees.

6. When both parents have employer-provided group coverage, the children are covered under A. the father's plan B. the mother's plan C. the plan of the parent whose birthday falls closest to the child's birthday D. the plan of the parent whose birthday falls closest to the start of the calendar year

D. When both parents have employer provided group coverage, the children are covered under the plan of the parent whose birthday falls closest to the start of the calendar year.

9. Carla enrolls in group insurance when she is eligible under her employer's plan. Because of an administrative error, her enrollment form is never sent to the company. When she later has a claim, the insurer will A. deny the claim because it has no record of her policy B. force the employer to pay the claim because it was the employer's error C. pay the claim only if the insurer is proven to have made an error D. accept the enrollment form and all of the past due premium and pay the medical claim

D. accept the enrollment form and all of the past due premium and pay the medical claim.